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Monday, May 17, 2021

Corporate bonds increasingly attractive to investors due to high yield

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HCMC – Corporate bonds have attracted a huge cash flow from other investment channels, including depositors, even though the Ministry of Finance has repeatedly advised investors to exercise caution before purchasing these bonds.

Customers can earn big returns on corporate bonds, 0.8 to 1.7 percentage points higher than those on savings, according to a report released by SSI Securities Corporation.

Bonds worth some VND159 trillion have been issued by enterprises since the beginning of the year, soaring by 50% year-on-year.

Since early 2020, individual investors have directly bought corporate bonds worth some VND22.7 trillion on the primary market, equivalent to 15% of the total issued bonds.

As of March 31, non-credit institutions and individuals were holding bonds worth some VND385 trillion.

Corporate bonds worth VND91.6 trillion were issued through private placement over the first five months of 2020, up 15% year-on-year, according to the Hanoi Stock Exchange.

During the five-month period, property firms issued bonds to ramp up their capital, while retail investors continued the trend of purchasing corporate bonds. Many securities firms and commercial banks were rushing to distribute corporate bonds to individual investors, Nguoi Lao Dong Online reported.

As such, the Ministry of Finance has recommended that bond issuers ensure their repayment capacity, while advising investors, mainly individuals, to seek out all information on bond issuers and fully assess risks before purchasing bonds.

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