HCMC – Prime Minister Pham Minh Chinh has signed an official dispatch ordering the Ministry of Finance to take prompt action to stabilize the volatile corporate bond market.
The market for corporate bonds, especially those issued via private placement, is in a crisis and there seems to be no way out at the moment.
In a recent meeting with seven securities firms and 32 companies that issued bonds via private placement, Minister of Finance Ho Duc Phoc said more than VND53 trillion worth of corporate bonds, 39% of them issued by real estate businesses, would fall due by the end of this year. The value of corporate bonds that will reach maturity in 2023 is VND284 trillion and VND363 trillion in 2024.
Businesses find it impossible to launch new bond issues to raise funds to repay for the bonds that are to fall due soon while they cannot gain access to bank loans due to the central bank’s monetary tightening and restrictions on real estate loans.
According to the official dispatch, the ministry is tasked with taking measures to ensure the corporate bond market will operate in a transparent, safe, healthy and effective manner.
The ministry will have to assess the ability of bond-issuing companies to repay those holding their bonds, especially those falling due this year and next.
The official dispatch said the Ministry of Finance would have to work with debt issuers to ensure they will deliver on their promises of paying principal and interest in full. If difficulties arise, these issuers will have to hold negotiations with bondholders to find common ground.
The measures of the ministry should go before the Government by December 20.
Late last month, the ministry wrote to bond-issuing businesses urging them to repay principal and interest in full to bondholders, and strictly comply with regulations on disclosure of information on corporate bond issues via private placememt.