MoF to submit solutions to strengthen bond market

An employee counting money at a bank office. VNA/VNS Photo

The Ministry of Finance (MoF) has just submitted to the Government a draft decree on trading private placement of corporate bonds in the domestic market and offering bonds to international markets.

The decree amends and supplements a number of articles of Decree 65 that amends and supplements Decree 153.

The ministry proposed to continue applying regulations on identifying professional securities investors in Resolution 65 from January 1, 2024.

Decree 65 stipulates that professional securities investors must ensure an average holding portfolio of VNĐ2 billion (US$85,016) for at least 180 days, excluding borrowed money.

According to MoF, amid the current difficult environment in liquidity, the extension of the regulations on professional securities investors will help the market have more time to adjust and can maintain the bond investment demand of investors who have financial potential but have not met a requirement on the provisions of professional securities investors of Decree 65.

The Ministry also proposed the Government allow a one-year extension of the mandatory credit rating requirement in Decree 65. Decree 65 requires from January 1, 2023, bond offering dossiers of issuers must have credit rating results, applicable to enterprises whose total value of bonds mobilised in 12 months is more than VNĐ500 billion and more than 50 per cent equity, or total outstanding debt is greater than 100 per cent of the equity.

Due to the difficulty in capital mobilisation, if enterprises have to perform credit rating, it will take considerable time and increase the issuance cost. Therefore, the Ministry submitted to the Government for permission to postpone the implementation of regulations on mandatory credit rating requirements for one year, from January 1, 2024, instead of from January 1, 2023, as prescribed in Decree 65.

For bonds offered to the public, the issuer must still get a credit rating from the beginning of next year.

In addition, the Ministry of Finance also proposed allowing issued bonds to extend the bond's maturity.

On December 13, Prime Minister Phạm Minh Chính requested MoF to submit measures ensuring the healthy, transparent, safe, and effective operations of the corporate bond market before December 20.

According to the dispatch signed by the PM, in accordance with Resolution No.156/NQ-CP dated December 6, 2022 at the November Government meeting, the Finance Minister must promptly take timely and effective solutions to stabilise and promote the development of the corporate bond market, thus ensuring legitimate rights and interests of investors in line with regulations.

The ministry is tasked with promptly reviewing the solvency and payment capacity of corporate bond issuers, especially bonds due for payment in 2022 and 2023; proactively taking specific and effective measures to handle issues within its authority to ensure the absolute safety and security of financial and monetary markets. — VNS