The State Bank of Vietnam has issued Circular No. 03/2023/TT-NHNN, which suspends the implementation of Clause 11 Article 4 of Circular No. 16/2021/TT-NHNN dated November 10, 2021, that regulates credit institutions and foreign bank branches buying and selling corporate bonds.

During the suspension of the implementation of Clause 11 Article 4 of Circular No. 16, credit institutions and foreign bank branches are allowed to repurchase unlisted corporate bonds that have not been listed on the stock market or registered for trading on the UpCom trading system.

These unlisted corporate bonds must have been previously sold by credit institutions, and/or issued in the same lot/same issuance of unlisted corporate bonds that a credit institution has sold, as long as they meet the provisions of Article 4, Circular No. 16/2021/TT-NHNN.

The buyer of these corporate bonds from a credit institution must pay the entire amount of the purchase at the time the credit institution signs a contract to sell the corporate bonds. Bond issuers must have the highest credit rating according to the credit institution’s internal credit rating regulations at the latest time before the credit institution buys the corporate bonds.

The issuance of Circular No. 03/2023/TT-NHNN aims to increase liquidity, remove difficulties, and promote the development of the corporate bond market in the current challenging situation, following the Government’s policy and the Prime Minister’s direction.

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Source: Vietnam Insider

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

The decree amends and supplements a number of articles of Decree 65 that amends and supplements Decree 153, the Vietnam News Agency reported.

According to the report, MoF 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 2 billion VND (85,016 USD) for at least 180 days, excluding borrowed money.

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 MoF said.

The MoF also proposed to 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 500 billion VND and more than 50% equity, or total outstanding debt is greater than 100% 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 also proposed allowing issued bonds to extend the bond’s maturity.

On December 13, Vietnamese Prime Minister requested Ministry of Finance 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 Prime Minister, in accordance with Resolution No.156/NQ-CP dated December 6, 2022 at the November Government meeting, the Minister of MoF 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, Vietnam News Agency reported.

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Source: Vietnam Insider