The vice president of the Viet Nam Bond Market Association, Phan Thanh Son, spoke toThoi bao Kinh te Viet Nam (Viet Nam Economic Times) on ways of developing the bond market.
In the first half of this year, Viet Nam’s bond market was quite turbulent. From the beginning of this year, the State Treasury has mobilised over VND96.8 trillion by auctioning off Government bonds. In your opinion, what is behind the thriving market?
Viet Nam saw a busy bond market in the first half of this year, especially in Government bonds. Because there have been no sharp changes in the structure of risk, investors are looking for safe assets with a high liquidity, so Government bond is considered first option.
I think that the factors that ensure a sustainable demand for Government bonds include much lower interest rates, a looser monetary policy from the State Bank of Viet Nam, a higher liquidity in banks, thanks to the slow credit growth and the raising of real capital.
As a result, the inter-bank interest rate remains low, creating an attractive gap between the interest on Government bond’s and the cost of capital as well as curbing the inflation rate.
However, the recent developments in the corporate bond market are still modest, are they not?
There are several main reasons why the corporate bond market in Viet Nam remains underdeveloped.
First, businesses were not properly aware of how to mobilise middle-term and long-term capital by issuing corporate bonds instead of relying on bank loans.
Moreover, corporate bonds have yet to be trusted by investors because of their low efficiency and transparency in the corporations’ operations, including ineffective capital spending.
Now, only domestic investors are willing to join Viet Nam’s corporate bond market and most of them are commercial banks. No foreign investors have joined the corporate bond market. As a result, market scale and growth are limited.
There is also an inadequate legal framework and infrastructure to develop the market further. For example, there is not a credit ratings agency or any mechanism whatsoever to protect the rights of those who join the market.
What measures do you think would boost growth in the bond market?
In my opinion, a key measure for sustainable market growth is to build a legal framework for transactions and the operations of primary and secondary markets, regulations for investors and other assorted services.
In particular, more detailed regulations are needed for bond issuance schemes, the transaction of derivatives and the operation of credit rating agencies.
Information about the issuance and transaction of Government bonds and corporate bonds need to be developed systematically to improve their transparency and the market’s liquidity.
We need to encourage collective investors such as retirement funds, to buy bonds to support the mobilisation of long-term capital for the economy.
The technological infrastructure also needs improving to facilitate the markets transactions.
How can the Viet Nam Bond Market Association help to boost the bond market?
First, we could focus on improving the association’s capacity in terms of organisation, staff and policy framework.
Secondly, we would boost the implementation of professional codes while we continue offer relevant training courses on the bond business.
We are also planning to establish a centre which will provide information about the activities of a corporate bond market. We are studying to develop professional services including bond evaluation and the credit rating of those that issue bonds. — VNS
Đăng ký: VietNam News