Manage and develop the corporate bond market following international practices

VCN - Economic expert Dr Nguyen Tri Hieu (photo) shared the legal framework for the private sale of corporate bonds with Customs News.
Synchronous solutions to regain stability for the corporate bond market Synchronous solutions to regain stability for the corporate bond market
How to regain investors' confidence in corporate bond market: experts How to regain investors' confidence in corporate bond market: experts
Boosting the corporate bond market Boosting the corporate bond market
Manage and develop the corporate bond market following international practices
Dr. Nguyen Tri Hieu

How do you evaluate the promulgation of Decree 65/2022/ND-CP and its impact on the corporate bond market?

Dr Nguyen Tri Hieu: In the past 10 years, the capital market has had good growth. By the first quarter of 2022, the stock and bond markets reached 135% of GDP in 2021. The corporate bond market has grown at an annual rate of 30-40% in the past five years. That was a significant development.

Unfortunately, in 2022, the corporate bond market fell into crisis with big cases like Tan Hoang Minh, Louis, and Van Thinh Phat, which caused the market to wobble and a loss of investors' confidence. Besides that, many investors who invested in corporate bonds are under investigation, so they don't know if they can get their money back. All of those issues are a huge blow to the bond market.

Decree 65/ND-CP was issued to amend and adjust Decree 153/2020/ND-CP, which has many loopholes and shortcomings and is unsuitable for new conditions. However, many people said that Decree 65 was too tight, thus paralysing the stock market and corporate bonds, but I think that is not true. Decree 65 does not tighten the corporate bond market, but on the contrary, it helps the market to be adjusted in line with Vietnam's financial environment, more in line with international practices and creates conditions for a more sustainable market. However, Decree 65 has shortcomings and is currently being amended and supplemented.

What are the key points to confirm that this Decree does not paralyse the market, sir?

Dr Nguyen Tri Hieu: Decree 65 emphasises the purpose of issuing bonds. It must be stated very clearly in the prospectus of the bond issue. This has not been mentioned in previous texts. Decree 65 also allows issuers to redeem bonds in advance based on an agreement between the issuer and the investor; unless the issuer violates the issuance plan or does not comply with regulations, it is required to buy back the bonds. That's the new point, and now it's becoming a problem for many publishers that have released it incorrectly. In this Decree, the regulations on professional securities investors are stricter than those of Decree 153 to enhance the seriousness of investment in individual corporate bonds. Another new point is that the offer file must have a credit rating, but currently, this regulation only applies to enterprises that issue bonds with a total par value every 12 months that must be more than VND500 billion and greater than 50% equity based on financial statements; or par value up to the time of registration of the offering must be greater than 100% of equity.

Along with these new points, Decree 65 also has regulations on issuance documents, including purposes of use, terms, rates, and methods of calculating the conversion price if it is a convertible bond. In particular, the financial indicators of the issuer must be stated in the prospectus: equity, total debt-to-equity, profit before tax, profit after tax, and other financial safety indicators. One regulation that makes me interested is that the Decree also stipulates the role of the owner's representative, or in other words, the legal representative of the investor. In summary, Decree 65 has many provisions to enhance transparency. From the perspective of protecting investors' interests, these are good conditions, ensuring more safety for investors. But from the perspective of publishers, this is a squeeze. There may be tighter regulations than before, but the adjustments and supplements of Decree 65 are necessary to establish a sustainable and stable corporate bond market development.

Besides these positive points, in your opinion, what solutions are needed for the market to recover in 2023 and the next several years?

Dr Nguyen Tri Hieu: All adjustments and supplements in Decree 65 are necessary conditions for a stable market. However, investors don't just look at such regulations to ensure their interests are protected. The current problem is regulatory regulation and investors' loss of confidence. When investors lose confidence, creating a sustainable market will be impossible. Therefore, the regulations need to be continuously changed. Besides, it is necessary to find solutions to create investors' confidence in the market. This is the core issue for them to return to the market.

To do that, legal changes are not enough; the market is in a downward spiral, so the Government needs to support stronger and more drastic. I suggest that the Government should have a national debt deferral program for issuers for one year when their bonds come due to help businesses overcome difficulties. However, this offer does not apply to all issuers, only those that comply with regulations.

What content of Decree 65 do you think needs to be further adjusted?

Dr Nguyen Tri Hieu: That's the credit rating. It is necessary to improve the credit rating because the knowledge level of investors in Vietnam has been limited. Issues such as credit analysis, financial statement dissection, analysis of investment ability, payment, cash flow, profit, development trend, and debt repayment ability of enterprises in the coming years require professional third-party support. In Vietnam, there are currently two units; there may be one more shortly. Take advantage of these credit rating agencies. I suggest that it is necessary to apply credit rating regulations to all corporate bond issuances, regardless of the issuance size. All issuances must pass a credit rating.

We cannot find a perfect document because all legal documents follow the passage of time and the development of the financial market. I hope that Decree 65+1 will mention the role of investors' legal representatives. It was mentioned in Decree 65, but in my opinion, it is necessary to define more clearly the responsibilities and rights of the legal representative for the owner to promote their role in protecting investors' interests, and contributing to stabilising the corporate bond market. Complying with the provisions of Decree 65 and solutions to remove difficulties for the corporate bond market in the Decree amending Decree 65 is expected to promote the recovery of the corporate bond market next year.

Thank you, sir!

By Hoai Anh (recorded)/ Ha Thanh

Related News

Investors play a key role in developing the industrial park system

Investors play a key role in developing the industrial park system

VCN - Dr. Phan Huu Thang, Chairman of the Executive Committee of the Vietnam Industrial Park Finance Association, former Director of the Foreign Investment Department (Ministry of Planning and Investment), said that basically, developing an industrial park successfully or not mainly depends on businesses, entrepreneurs - industrial park investors.
The Minister of Finance chaired the Vietnam - Korea Financial Investment Promotion Conference

The Minister of Finance chaired the Vietnam - Korea Financial Investment Promotion Conference

VCN - On March 7, in Seoul Capital, South Korea, the State Securities Commission (SSC) organized a financial investment promotion conference with the theme "Vietnam - Investment destination". Minister of Finance Ho Duc Phoc attended and chaired the Conference.
Many real estate businesses face difficulties of cash flow

Many real estate businesses face difficulties of cash flow

VCN - Although many policies to overcome difficulties have been put forward by the Government, ministries and branches but many real estate businesses face the situation of being "thirsty for money". Finding solutions to unlock capital sources for the real estate market to promote recovery and development is essential.
Export growth supports the economy and stock market

Export growth supports the economy and stock market

VCN - Vietnam's export growth is on the recovery path, thereby becoming a positive signal for the economy as well as the stock market in 2024.

Latest News

Closely monitoring market fluctuations to consider appropriate time to adjust prices

Closely monitoring market fluctuations to consider appropriate time to adjust prices

VCN - According to a report from the Ministry of Finance, in the second quarter and the remaining months of 2024, price management and administration need to ensure good control of inflation and continue to remove difficulties for production and business.
How does the Land Development Fund work effectively?

How does the Land Development Fund work effectively?

VCN - Speaking at the Conference to collect opinions on the draft Government Decree regulating the Land Development Fund held by the Ministry of Finance on April 22, Deputy Minister of Finance Bui Van Khang emphasized the necessity of the development of the Government Decree regulating the Land Development Fund.
Vietnam seeks to remove obstacles in upgrade of securities market

Vietnam seeks to remove obstacles in upgrade of securities market

The State Securities Commission of Vietnam (SSC) recently held an online working session with the World Bank (WB) and the Asia Securities Industry and Financial Markets Association (ASIFMA) to discuss ways to remove obstacles related to criteria for upgrading the Vietnamese securities market.
Price stability from supply increase and transparency in trading in gold market

Price stability from supply increase and transparency in trading in gold market

VCN - To stabilize the gold market, economic expert Prof.Dr. Tran Tho Dat, a member of the Prime Minister's Economic Advisory Group, said that it is necessary to implement solutions to make all transactions transparent in the gold market, implement electronic invoices as well as pay taxes in gold investment activities.

More News

SBV takes more actions to stabilise foreign exchange rates

SBV takes more actions to stabilise foreign exchange rates

The State Bank of Vietnam (SBV) on April 23 took some moves like issuing treasury bills (T-bills), further employing T-bills as an open market operation (OMO), and stipulating liquidity and interest rates in the inter-bank market in the face of surging USD/VND exchange rates.
Proposal to exclude criminal liability for tax officials when businesses provide false information to refund VAT

Proposal to exclude criminal liability for tax officials when businesses provide false information to refund VAT

VCN - The revised Draft Law on Value Added Tax (VAT), besides inheriting many provisions from the current Law, also revises and supplements several contents to suit the actual situation, including some notable contents in VAT refund.
Corporate bond maturity in 2024 remains high: MoF

Corporate bond maturity in 2024 remains high: MoF

The volume of corporate bonds maturing in 2024, though lower than that in 2023, is till at a high level, mostly in industries with payment risks such as real estate and renewable energy, according to a report by the Ministry of Finance (MoF).
Support clearance procedures for imported gold for bidding

Support clearance procedures for imported gold for bidding

VCN - The State Bank (SBV) has sent a document to competent ministries and branches requesting coordination in implementing the Prime Minister's direction in gold market management.
The exchange rate will gradually cool down from the end of the second quarter of 2024, while interest rates will remain low

The exchange rate will gradually cool down from the end of the second quarter of 2024, while interest rates will remain low

VCN - According to forecasts, Vietnam's financial sector in 2024 will be more positive, with the exchange rate gradually cooling down from the end of the second quarter of 2024, while interest rates will remain low to promote growth.
Majority of credit institutions forecast profit growth in 2024

Majority of credit institutions forecast profit growth in 2024

A total of 86.2% of credit institutions expect their profit this year to grow compared to 2023, according to the latest survey of the State Bank of Vietnam (SBV).
Central bank plans to auction gold bars on April 22

Central bank plans to auction gold bars on April 22

The State Bank of Vietnam (SBV) will auction SJC-branded gold bars on April 22, a representative of the central bank said on April 19.
Old loans must endure higher interest rates temporarily: central bank

Old loans must endure higher interest rates temporarily: central bank

The average lending interest rate for new loans by commercial banks is reported at around 6.4% per year, a decrease of 0.7 percentage point per year compared to the end of last year. However, borrowers with loans issued before the latest rate adjustment still must pay higher rates, according to the State Bank of Vietnam (SBV).
State-owned enterprises flourished

State-owned enterprises flourished

VCN - The production and business situation in the first quarter of 2024 of the state-owned enterprise sector continues to have many bright spots with many financial targets completed or exceeding the set plan. This is the premise for positive business results in the second quarter and the whole year 2024.
Read More

Your care

Latest Most read
Closely monitoring market fluctuations to consider appropriate time to adjust prices

Closely monitoring market fluctuations to consider appropriate time to adjust prices

VCN - According to a report from the Ministry of Finance, in the second quarter and the remaining months of 2024, price management and administration need to ensure good control of inflation and continue to remove difficulties for production and business.
How does the Land Development Fund work effectively?

How does the Land Development Fund work effectively?

Deputy Minister of Finance Bui Van Khang emphasized the necessity of the development of the Government Decree regulating the Land Development Fund.
Vietnam seeks to remove obstacles in upgrade of securities market

Vietnam seeks to remove obstacles in upgrade of securities market

The State Securities Commission of Vietnam (SSC) recently held an online working session with the World Bank (WB) and the Asia Securities Industry and Financial Markets Association (ASIFMA) to discuss ways to remove obstacles related to criteria for upgrading the Vietnamese securities market.
Price stability from supply increase and transparency in trading in gold market

Price stability from supply increase and transparency in trading in gold market

VCN - To stabilize the gold market, economic expert Prof.Dr. Tran Tho Dat, a member of the Prime Minister's Economic Advisory Group, said that it is necessary to implement solutions to make all transactions transparent in the gold market, implement electr
SBV takes more actions to stabilise foreign exchange rates

SBV takes more actions to stabilise foreign exchange rates

The State Bank of Vietnam (SBV) on April 23 took some moves like issuing treasury bills (T-bills), further employing T-bills as an open market operation (OMO), and stipulating liquidity and interest rates in the inter-bank market in the face of surging USD/VND exchange rates.
Mobile Version