MoF strictly controls corporate bond market

VCN – After plunging in April, the corporate bond issuance increased again in May and June, though showed some potential risks. The Ministry of Finance calls for inspection and control to be strengthen in the corporate bond market.
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MoF strictly controls corporate bond market
The Ministry of Finance requests to expedite inspection and control corporate bond market.

Potential Risks for investors and market

On July 20, the Ministry of Finance Ho Duc Phoc signed Official Letter 7048/BTC-VP to the State Securities Commission, Department of Finance, Banking and Credit Institutions, the Department of Accounting and Auditing Supervisory, Department of Price Management, Inspector of the Ministry of Finance, and the Vietnam Stock Exchange, requesting the inspection and control of the corporate bond market be expedited.

On April 25, Minister of Finance issued 01/CT-BTC, directing inspection, supervision and rectification of issuance be strengthen and the investment and service provision on the private placement corporate bond market.

After Directive 01 was issued, the issuance of corporate bonds plunged in April 2022, worth VND257,857 billion. Through supervising the issuance of corporate bonds, there are some unusual operations and potential risks for investors and the stock market.

The Minister of Finance requested the above-mentioned units actively strengthen the management and supervision of the issuance and mobilization of private placement corporate bonds and expedite inspection of operation in the corporate bond market, specifically as follows:

Regarding the review and amendment of regulations related to the offering and trading of corporate bonds, the Minister asked the Department of Finance, Banking and Credit Institutions to closely coordinate and gather feedback of relevant agencies to submit to the Government the Decree revising a number of articles of Decree 153/2020/ND-CP.

The Minister called on the Department of Finance, Banking and Credit Institutions and the State Securities Commission to urgently perform tasks assigned in Directive 01/CT-BTC and Notice 396/TB-BTC dated July 12, 2022 of the Ministry of Finance, reviewing the legal framework on issuance and transaction of private placement corporate bonds as stipulated in the Law on Securities, Decree 153/2020/ND-CP and Decree 155/2020/ND-CP.

The State Securities Commission is asked to review and assess the implementation of Law on Securities and legal documents to propose solutions to amend the regulations on professional securities investors to comply with the reality and management and supervision mechanism for service providers to ensure a stable, transparent and safe market development.

Monitoring the list of companies and organizations showing abnormal signs

Regarding the report on inspection results of the legal compliance of issuers and consulting service providers, the Minister of Finance requested the State Securities Commission, the Department of Finance, Banking and Credit Institutions, the Department of Accounting and Auditing Supervisory, the Inspector of the Ministry of Finance, to report the results of inspection under the approved plan before July 31, 2022.

The Minister directed ministries, departments and other relevant units to monitor the list of enterprises and organizations that show signs of abnormality, issue corporate bonds at high interest rates and outstanding loans larger than the equity for strict management and inspection.

The Inspector of the Ministry of Finance, the State Securities Commission, the Department of Finance, and banking and credit institutions to expedite the inspection of the issuance, transaction, and service provision of corporate bonds; professional securities investor certification activities at service-providing securities companies and issuers.

When detecting violations of law provisions, the ministries and departments must strictly fine or transfer the case to the police for handling.

After implementing the inspection, the ministries and departments must widely publish offences and penalties for administrative violations to ensure market transparency.

The Department of Accounting and Auditing Supervisory is must also strengthen the inspection and supervision of enterprises providing accounting and auditing services. If the department detected signs of violation of legal provisions on auditing, accounting and auditing standards, failure to ensure independence and objectivity in the audit process, violation of professional ethics of practitioners when providing audit services of financial statements and information disclosure records of bond issuers, it must strictly handle these offences.

The Minister requested the Department of Price Management strengthen inspection and supervision of appraisal service providers, ensuring appraisal quality when providing appraisal services; focus on assessing collateral assets of the corporate bond issuer. If there are signs of violation, they must be strictly handled according to law provisions.

By Hoai Anh/Ngoc Loan

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