Policy update
Tu an Linh
Decree raises standards for corporate bond market
six months of 2020, 130 enterprises issued bonds, mobilising a total of over VND156,000 billion (USD6.7 billion) through 818 issuance batches (up 50 percent year-on-year). The size of the corporate bond market grew at an average rate of 45 percent per year from 2017 to June 2020.
The government’s Decree 81, which comes into effect on 1 September 2020, will help raise standards in the corporate bond market as well as removing low-quality issuers in order to better protect investors.
A
report released by the BIDV Training and Research Institute said that since the end of 2018 when Decree 163 was promulgated, the corporate bond market has made great leaps. Market capitalisation in 2018 was only 9.01 percent of the country’s GDP, but increased to 10.85 percent in 2019, equivalent to about VND640,000 billion (USD27.6 billion). Volume of corporate bonds issued in 2019 reached over VND332,000 billion (USD14.3 billion). In the first
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B I D V r e vi e w
According to experts from BIDV Research and Training Institute, although this is a good signal for the economy and the financial system, it shows signs of "hot" growth. Except for institutional and professional investors, the increased investment by individual investors (including those who do not have the ability to analyse and evaluate, but are only interested in interest rates) will pose risks to investors, issuers and market stability. Risks are also persistent as some companies have issued bonds with total values beating their equity capital by many times.
