The chance of “debt bomb” bursting, particularly in the actual property group

On the Dialogue with the subject “People investing in company bonds: Figuring out and coping with dangers” organized by Vietnam Financial Evaluation on August 30, Mr. Nguyen Hoang Duong, Deputy Director of the Finance Division Within the first 6 months of the yr, the quantity of bonds issued to the general public reached over VND 15,000 billion, up 53% over the identical interval in 2020, accounting for 8% of the entire variety of banks and monetary establishments, the Ministry of Finance stated. the quantity of company bonds issued, larger than the extent of 6.5% in 2020.

Many companies have issued bonds with enticing rates of interest, a mean of 1.5 instances and even 2 instances larger than the deposit rates of interest of banks.

Specialists stated that almost all of particular person traders right now don’t care a lot concerning the scores and efficiency of companies, however solely want excessive rates of interest.

Due to this fact, over the previous time, the administration companies have issued a collection of insurance policies to strictly regulate the issuance of company bonds, and on the identical time, recommending particular person traders to not simply run after excessive rates of interest.

Within the context of the sophisticated growth of the epidemic, which negatively impacts the economic system, specialists are involved about dangers from company bonds within the coming time.

Dr. Nguyen Tri Hieu, a banking and finance skilled, believes that alternatives and dangers are two elements that at all times go hand in hand. Accordingly, though the operator has restricted market individuals, ie restricted demand, however within the context of elevated dangers because of the epidemic, excessive bond rates of interest are nonetheless nicely acquired by traders. Nevertheless, particular person traders mustn’t solely have a look at excessive rates of interest, however should discover a method out for the approaching years.

Bonds are nonetheless issued due to rates of interest, whereas tens of hundreds of companies are pressured to depart the market. If from now till the tip of the yr, the Covid-19 epidemic state of affairs continues to be not fully managed, this quantity might attain 100,000 companies. He expressed concern that nobody is certain that amongst them there are companies which have issued bonds.

“The chance of debt bombs bursting step by step seems, particularly actual property bonds,” stated Mr. Hieu.

This skilled stated that, through the tough financial interval brought on by the epidemic, this isn’t the time when particular person traders increase and make earnings in any respect prices, however it’s the time of choice and warning.

Mr. Do Ngoc Quynh, Normal Secretary of the Vietnam Bond Market Affiliation shared the view that no funding channel or funding product can solely be worthwhile with out danger. To make selections, traders should perceive themselves, should have an image of their private monetary state of affairs to keep away from placing all their eggs in a single basket. Every investor may have his or her personal danger urge for food.

Typically, consulting corporations will assist traders unfold dangers into many alternative funding channels. Buyers can select companies which were respected, branded, working available in the market for a very long time. Concerning the issuance technique, it’s advisable to decide on bonds issued to the general public, even with a credit standing, the higher.

When it comes to being a credit standing service supplier, Mr. Nguyen Quang Thuan, Chairman of the Board of Administrators of FiinRatings, stated that to be able to keep away from dangers, traders want to make use of skilled recommendation and self-assess danger if succesful, diversifying funding channels with the identical traits as bond funds, pension funds, and so forth.

Mr. Thuan additionally proposed two widespread indexes for traders when assessing the issuer’s capability, particularly the flexibility to pay the principal (debt/EBITDA) and the flexibility to pay curiosity on loans (EBITDA). /curiosity bills).

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