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Friday, August 19, 2022

Finance Ministry urges corporate bond investors to exercise prudence

By Van Phong

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HCMC – The Ministry of Finance has advised investors to adequately assess and carefully consider the pros and cons of investment in corporate bonds.

Individuals who buy corporate bonds through private placement should exercise prudence, learn about laws on bonds and research the firms which issue bonds, the ministry said in a dispatch sent to investors on July 25.

In addition, investors should differentiate between bonds covering payment guarantees and bonds with guaranteed issuance, to avoid risks of bond acquisitions.

Also, the ministry advises investors to thoroughly learn about the conditions for collateral, as well as its quality and value, along with commitments made by bond issuers to collateral. In many cases, real estate projects and stocks are used as collateral. However, uncertainty is facing the real estate and stock markets, so the value of collateral might fall, affecting investors.

Corporate bond issues via private placement totaled VND257.9 trillion in the first six months of 2022, up 21% year-on-year, according to the ministry.

Private placement is for professional investors who have strong financial health and investment experience. As such, investors should not buy bonds if they are not listed as professional investors.

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