(PLO)- The gloomy corporate bond market will put pressure on banks and create significant concerns when the amount of bonds maturing up to hundreds of trillion dong by the end of this year.
What is easy to see about the state of the corporate bond market is the significant decrease in the amount of bonds issued. In April and May, businesses only sold a few thousand billion dong of bonds to investors. Lack of cash inflow, corporate bonds are causing businesses to lose long-term capital to invest in potential projects as well as the performance of obligations and responsibilities for the payment of interest and principal of the bond. Because the source of capital for businesses today relies on two sources including the bond market and credit.
Previously, from 2019 to the first months of 2022, the corporate bond market reached a total issuance volume of more than 1 million billion VND. This has significantly helped capital supply activities for businesses and the economy, especially helping credit institutions reduce the burden of term risk.
Another phenomenon is emerging, while the issuance is sluggish, businesses have to accumulate capital to buy back previously issued corporate bonds. This also means that it is difficult for businesses to focus on production and business as before because of a lack of investment funds. Calling for capital is not possible while focusing on debt repayment, making it difficult for businesses to husband.
The government has been very supportive of the corporate bond market with a series of policies. Typically, Decree 08/2023 and Circular 03/2023 clear up the bottlenecks in the market but only create positive effects in a short time. The difficulty of issuing corporate bonds is also shown due to the fact that domestic and foreign economic growth tends to slow down, interest rates are also high, and investors’ confidence is low.
According to experts, it is difficult to come up with a comprehensive solution to limit all causes of the market’s gloom, especially the group of causes stemming from the general situation of the macro economy. The group of immediate solutions, like the spirit of Decree 08 and Circular 03, is to focus on helping issuers overcome debt repayment pressure and limit default on a large scale, causing serious consequences. for the corporate bond market and the economy.
More importantly, the breakthrough of the corporate bond market needs to be implemented synchronously for both businesses and investors. In particular, enterprises are still responsible for the payment obligations to investors.
Investors themselves must also respect the provisions of the law to protect themselves, need to take courses before being allowed to participate in the bond market. This will ensure that investors understand the potential risks in investing in corporate bonds.
In order to increase the positive impact on investor demand as well as market liquidity, the Government may consider other support measures such as issuing tax incentives for investors. participating in the corporate bond market, implementing and perfecting the centralized corporate bond trading system…