Market confidence is affected when capital flows in the wrong direction
The Government Inspectorate has just published Inspection Conclusion No. 276/KL-TTCP on compliance with legal policies on the issuance of individual corporate bonds (CIs) and the use of funds from individual CIs, period January 1, 2015 to June 30, 2023.
In this conclusion, the Government Inspectorate said that the use of capital from bond issuance must comply with the issuance plan approved by competent authorities, the content of information disclosure to investors and in accordance with the provisions of law.
However, a series of enterprises use the money from issuing bonds for the wrong purpose.
According to experts, this is not only a violation of financial management but also one of the reasons why the bond market - an important medium and long-term capital mobilization channel - is gradually losing the trust of investors.
Mr. Nguyen Quang Huy, CEO of the Faculty of Finance - Banking, Nguyen Trai University, commented: "The underlying cause lies not only in businesses but also in market monitoring structures. Some businesses are under short-term capital pressure, while post-issuance supervision work has not been designed synchronously. The information disclosure mechanism lacks depth, the role of supervisory intermediaries has not been fully promoted, and the level of risk analysis of a part of investors is still limited".
According to Mr. Huy, this not only creates individual risks but also erodes the confidence of the entire market, causing capital costs to increase and liquidity to decrease. When confidence is damaged, the bond market - which is a medium and long-term capital mobilization channel for the economy - will find it difficult to properly promote its strategic role.
Use specialized accounts, strictly monitor using technology
Although the current legal framework has been strengthened, Mr. Nguyen Quang Huy said that the biggest weakness lies in the post-inspection and cash flow management stage after issuance. The separation of accounts using bond capital has not been thoroughly applied, making it difficult for management agencies and investors to monitor actual cash flow.
He proposed applying a specialized account at a supervisory bank, only disbursing when there are valid documents and serving the correct mobilization purpose. Along with that, there should be an independent monitoring mechanism with the right to temporarily suspend disbursement when detecting signs of abnormality, and at the same time report directly to the management agency.
In addition, the participation of intermediary organizations such as supervisory banks, issuers or entrusted units has not been fully regulated on rights and obligations. Capital use reports are often only periodic, without an early risk warning mechanism. Therefore, to overcome this, it is necessary to have a consistent, transparent and inter-sectoral monitoring mechanism, instead of relying only on manual reports from businesses.
Therefore, Mr. Huy proposed that it is necessary to simultaneously combine technical, legal and monitoring technology measures.
First, apply a specialized account at a supervisory bank to manage all mobilized cash flow; only disburse when there are valid documents.
Second, establish an independent monitoring mechanism, have the right to temporarily suspend disbursement and report directly to the management agency when detecting signs of abnormality.
Third, applying digital platforms in cash flow monitoring, helping to connect data between businesses, banks and management agencies, ensuring near-real-time monitoring.
Finally, it is necessary to periodically audit the use of capital, expand the scope of audit from finance to mobilization purposes, and create an independent verification layer for the market.
Enterprises self-discipline using market mechanisms
Regarding sanctions, he assessed that the current administrative penalty level is not enough to deter, but increasing the penalty needs to go hand in hand with restoring market confidence. In cases of intentional use of capital for the wrong purpose, causing damage to investors, legal liability can be considered higher, but must be based on clear criteria to not create a fear of legal issuance.
At the same time, developing an independent credit rating system is a soft solution but has long-term effects. When businesses know that all behavior reflects directly on credit score and mobilization costs, they will adjust themselves. This is a way to "discipline yourself" by using a market mechanism - both sophisticated and sustainable.
According to Mr. Huy, the long-term solution for the current market is to build a culture of transparency and financial knowledge in the entire market. He proposed five action directions, including: Improving investor capacity; introducing financial education into schools; standardizing information disclosure; developing an early risk warning system; and encouraging businesses to comply with good standards with incentives on procedures and mobilization costs.
The bond market is only sustainable when trust, knowledge and discipline run in parallel. When businesses consider transparency as capital, investors consider understanding as strength, and management agencies consider data as an effective monitoring tool, we will have a market that is both safe and developed, accompanying sustainable economic growth, said Mr. Huy.
