Gov’t directs urgent action to stabilize corporate bond market

The Government has asked relevant ministries and agencies to urgently identify problems and solutions to stabilize the corporate bond market.

Under Resolution 143/NQ-CP passed during the October cabinet meeting, the Finance Ministry has been asked to report soon on the maturity of corporate bonds via private placements in the fourth quarter of 2022 and 2023.

The ministry must promptly remove difficulties in the implementation of the newly-issued Decree 65/2022/ND-CP on private placement of corporate bonds.

It should also take steps to address short-term difficulties related to corporate bonds and promote healthy, efficient and sustainable development of the market in the medium and long term.

According to the Vietnam Bond Market Association (VBMA), more than VND61 trillion ($2.45 billion) of corporate bonds will mature in the two remaining months of this year, including nearly VND48 trillion ($1.9 billion) in December.

Next year, September and December will see the largest volume of maturing corporate bonds at VND42.02 trillion ($1.7 billion) and VND54 trillion ($2.17 billion), respectively.

After the cancellation of more than VND10 trillion ($422.4 million) worth of bonds offered by Tan Hoang Minh Group’s subsidiaries in early April along with the regulator's tightened supervision, inspection and punishment to make the market healthy, issuers and investors have become more cautious of this capital raising channel.

On August 8, Truong My Lan, chairwoman of Ho Chi Minh City-based property developer Van Thinh Phat Group, was arrested for alleged fraud in the issuance and trading of corporate bonds in 2018 and 2019.

The government's resolution also requested the State Bank of Vietnam (SBV) to coordinate with agencies and localities to manage monetary policy implementation in a prudent, proactive and effective manner in combination with a reasonable, open fiscal policy.

The cabinet asked the central bank to manage interest rates, exchange rates and credit flexibly and take measures to intervene in the forex market when necessary in accordance with regulations, ensuring stability of the money market and the credit system. It should activate solutions to limit foreign currency hoarding and prevent dollarization as well as goldenization in the economy.

The SBV should ensure sufficient credit for the economy, focusing on production, priority areas and growth drivers while strictly controlling credit for potentially risky areas, it said.