The Private Corporate Bond Market: A Year of Steady Trading and Robust Growth

On August 17, 2024, Hanoi Stock Exchange (HNX) in collaboration with Vietnam Foreign Trade Joint Stock Bank (Vietcombank) held a conference to review the one-year operation of the Private Corporate Bond Trading System (from July 19, 2023, to July 19, 2024).

The conference was attended by Vu Thi Chan Phuong, Chairwoman of the State Securities Commission of Vietnam (SSC); Luong Hai Sinh, Chairman of the Members’ Council of Vietnam Stock Exchange (VNX); Nguyen Duy Thinh, Chairman of Hanoi Stock Exchange (HNX); Nguyen Son, Chairman of the Members’ Council of Vietnam Securities Depository and Clearing Corporation (VSDC); representatives of the designated paying bank, including Nguyen Thanh Tung, Chairman of the Members’ Council of Vietnam Foreign Trade Joint Stock Bank (Vietcombank – VCB); along with representatives from the Department of Finance and Banking of the Ministry of Finance, the Bond Association, and representatives of issuing organizations, leaders of units under the SSC, VNX, VSDC, and HNX.

In his opening remarks, Nguyen Duy Thinh, Chairman of HNX, stated that under the close and determined direction of the Ministry of Finance and the SSC, along with the positive and effective coordination of VSDC, Vietcombank, and member units, after nine months of preparation, on July 19, 2023, the centralized private corporate bond trading system was officially inaugurated and operated at HNX. Despite the short preparation time, the private corporate bond trading system was launched and operated in accordance with the regulations and directions of the Ministry of Finance’s leaders, and after one year of operation, the private corporate bond trading system has been operating safely and smoothly, with the private corporate bond market witnessing significant growth, along with improvements in the issuance of private corporate bonds in the primary market.

Following this, at the conference, representatives of Hanoi Stock Exchange, Vietnam Securities Depository and Clearing Corporation, and Vietnam Foreign Trade Joint Stock Bank reported on the listing, trading, registration, depository, and payment situations on the private corporate bond market after one year of operation.

On behalf of HNX, Vu Thi Thuy Nga, Vice Chairman of HNX, stated that at the time of its inauguration, the market had 19 private corporate bond codes from 3 issuing organizations registered for trading with a total registered trading value of VND 9,060 billion. After one year, the system has received applications and facilitated the trading of 1,146 private corporate bond codes from 301 enterprises with a registered trading value of nearly VND 832,189.4 billion. The number of private corporate bond trading members has also grown rapidly from 8 members at the market’s inauguration to 48 members at present.

Notably, the liquidity of private corporate bonds has improved significantly, with the average trading value in the first month of the market’s inauguration reaching VND 250.6 billion per session. After one year, the average trading value of private corporate bonds reached VND 3,704.5 billion per session, mainly concentrated on investors such as credit institutions (38.3%) and securities companies (nearly 32%).

On the other hand, the development of the secondary private corporate bond market has also facilitated enterprises in raising capital in the primary market, contributing to the promotion of a healthier and more sustainable primary private corporate bond market. In the domestic market, from July 19, 2023, to July 19, 2024, there were 167 successful issuances with a value of VND 393,892.6 billion.

Also at the conference, data from the report presented by Duong Ngoc Tuan, Vice Chairman of VSDC, showed that by the end of September, there were 190,826 investor accounts, including 190,034 individual investor accounts. The payment value exceeded VND 3,000 billion per day, with the highest payment value of over VND 10,400 billion on June 11, 2024. In the first year of operation, VSDC registered for the first time more than 1.47 billion bonds, equivalent to nearly VND 900,000 billion; and executed 1,400 codes/batches of bonds, equivalent to nearly VND 96,500 billion. Generally, although the number of initial registration and bond execution dossiers was large in the initial implementation period, VSDC processed these dossiers in accordance with the prescribed time frame. The increase in the number of members and investor accounts participating in VSDC’s private corporate bond system has contributed to the growth in the number, trading value, and payment value of private corporate bonds.

In his role as the paying bank representative, Vu Quang Dong, Deputy Director in charge of the Capital Market Division at Vietcombank, shared that contributing to the overall success of the secondary private corporate bond market in the past year, Vietcombank’s private corporate bond trading payment system has demonstrated its superiority with modern and advanced technology in ensuring safe and secure connections and communications. Accordingly, Vietcombank’s system has facilitated instant payment for each transaction, managed the balance of bond purchase/sale money for each investor, and provided specific parameters showcasing the system’s capacity and potential to meet long-term market demands.

In her directive speech at the conference, Vu Thi Chan Phuong, Chairwoman of the SSC, highly appreciated the achievements made during the one-year official operation of the private corporate bond trading system.

Along with the achievements and suggestions made at the conference, the Chairwoman of the SSC emphasized that the management agency, units, market members, and issuing organizations need to continue researching and proposing solutions to overcome existing challenges, promoting the development of the corporate bond market in general and the private corporate bond market in particular, in terms of quality, efficiency, transparency, and sustainability, thus contributing more significantly to its role as a medium and long-term capital mobilization channel for enterprises and the economy.

“I believe that the private corporate bond market has been, is, and will continue to be one of the capital mobilization channels for enterprises, alongside bank credit channels, public securities issuance, and other capital mobilization channels.” The Chairwoman of the SSC emphasized.