Vietnam corporate bond trading system inaugurated

A trading platform for private placement corporate bonds (PPBs) was launched in Hanoi on Wednesday, marking an important milestone for Vietnam’s bond market

It is expected to help increase market liquidity and transparency, as well as provide regulators, market players, and investors with more information for appropriate market management and development policies as well as investment decisions, said Minister of Finance Ho Duc Phoc.

According to the minister, although Vietnam's corporate bond market was established a long time ago, it has only developed strongly in the past five years, especially in 2021 and early 2022. By the end of 2022, the outstanding corporate bond debt was about VND1,200 trillion ($50 billion), equivalent to 12.6% of GDP and 10% of total outstanding credit.

Vietnam has basically built a legal framework to encourage the development of the corporate bond market. However, compared to its potential and other markets in the region, Vietnam's corporate bond market size remains modest, with its balance equivalent to only 13% of GDP, much lower than 56% in Malaysia, 38% in Singapore and 25% in Thailand, he said.

Vietcombank chairman Pham Quang Dung said the bank has developed a specialized payment system for the private placement corporate bond market based on the most advanced payment standards, called VCB C-Bond.

The system enables investors to trade bonds on the Hanoi Stock Exchange (HNX) almost like normal stocks, but under the T+0 payment mechanism which means that the money or bonds will be immediately credited to investors’ accounts.

There will be trading sessions for private placement corporate bonds on the HNX from Monday to Friday each week, excluding public holidays, lasting from 9 a.m. to 11:30 a.m and from 1 p.m. to 2:45 p.m.

Besides the role as a payment bank, Vietcombank will actively participate in the market as an issuer, a depository member and a trader. In the opening session, the bank registered to trade its 15 private placement bond codes.

By the end of the inaugural session, the system had performed 39 transactions for more than 5 million bonds, with a total value of over VND1.78 trillion ($75.25 million).

The corporate bond market experienced overheated growth in 2020 and 2021 with an issuance value of nearly VND462 trillion ($19.66 billion) and VND658 trillion ($28 billion) respectively, according to the Vietnam Bond Market Association.

However, the market slowed after the mid-2022 arrests of real estate business leaders for bond issuance violations and improper use of mobilized capital.

In the first six months of 2023, VND43 trillion ($1.8 billion) of private placement corporate bonds were issued, down 76% year-on-year. Meanwhile, around VND159 trillion ($6.7 billion) of bonds, including publicly-offered bonds, will reach maturity in the second half of the year.