Vietnam urged to fine-tune legal framework for corporate bond market to thrive

Vietnam ought to further refine institutional and legal frameworks to develop a stable, effective, and sustainable corporate bond market, said an official.

Nguyen The Ngan, director of the Financial and Monetary Department under the Ministry of Planning and Investment, made the recommendation in his presentation at a workshop on corporate bond market development held by The Investor on Friday.

Stressing the recovery of the local corporate bond market, Ngan said there were 56 privately-placed corporate bond issuances worth VND45 trillion ($1.8 billion) in the first seven months of this year, up 57% year-on-year.

However, the market continues to face challenges, particularly with maturity pressure. An estimated VND200 trillion ($7.98 billion) worth of bonds is expected to mature this year, down 3% over the year, he stressed.

Meanwhile, many individual investors remain inexperienced and lack a proper understanding of corporate bond trading and risk assessment. Some corporate bond issuers also fail to comply with regulations governing corporate bond offerings and trading. Many businesses have not been fully transparent in fulfilling their obligations in the bond market.

To foster the local bond market, Ngan recommended that State agencies implement necessary strategies, policies, and solutions to attract capital from both domestic and foreign investors.

He proposed refining the institutional, policy, and legal frameworks for the corporate bond market. It is also essential to finalize the drafting of a decree regulating the private offering and trading of corporate bonds in the domestic market, as well as the issuance of corporate bonds overseas.

Moreover, Ngan emphasized the importance of supervising and reviewing issuance registrations, particularly for bonds with large values and high interest rates before issuance. Strengthening the inspection, examination, and oversight of capital use according to enterprises' stated issuance purposes is also crucial.

To improve product quality in the corporate bond market, Ngan suggested encouraging the involvement of sectors related to green bonds, construction bonds, and investment support industries. Regarding real estate bonds, it is important to address legal issues associated with land, planning, investment, housing, urban development, and construction.

Ngan also highlighted the need to manage the development of the credit rating market in Vietnam, suggesting that international practices be studied to develop investor protection funds.

Regarding investors, he proposed developing and diversifying the investor base, particularly among institutional and professional investors, as well as raising their awareness of the corporate bond market.