The Vietnam Association of Financial Investors (VAFI) has sent the prime minister a notable proposal meant to look for solutions to mobilize long-term, low-cost capital for the economy. Two key takeaways from the proposal are to allow financially healthy banks to issue bonds with payment guarantees from the State Bank of Vietnam (SBV); and let local governments and State financial organizations to sell bonds with the Ministry of Finance serving as the payment guarantor. The VAFI proposal stresses that “SBV needs to spell out the proportion and volume of bonds issued to individual investors, (and) to issue regulations to ensure that under any circumstance, commercial banks are able to pay principal and interest for individual bondholders.” Subjects and time of bond issues questionable With this VAFI proposal, the issuing subject has largely shifted from enterprises to commercial banks at a time when banks have little or no appetite to issue bonds to raise capital. Numerous banks have lately cut deposit interest rates, not only because of the central bank’s direction, but also due to their difficulty in finding eligible borrowers. Credit growth rates at most banks in the first half of this year were lower than in the same period […]
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