An overview of the TNR Star Thoai Son project under the TNR Holdings Vietnam Real Estate Investment and Development Joint Stock Company in the southern province of An Giang (Photo: tnrstars-thoaison.com) Hanoi (VNS/VNA) - The corporate bond market hadseen exponential growth in recent years as banking credit for several sectorswas narrowed, forcing firms to shift to bond issuance to raise capital, NguyenKhac Quoc Bao, head of the Financial and Bank Department at the HCM CityEconomics University, told Thoi bao Kinh doanh (Business Times).
“However, the booming growth of the corporate bond marketimplied significant risks as firms are issuing more bonds without clarifyingthe purpose of the capital they're trying to raise, repayment plans or bondyields,” Bao said.
In a move to change the status quo, the ministry has madepublic a draft decree to amend several points of Decree 163/2018/NĐ-CP aboutcorporate bond issuance for comment in order to manage and monitor the currentrapid growth of the corporate bond market.
This move would help prevent risks which might arise from theabuse of this capital raising channel, Bao said.
The newly-released draft includes amendments to conditionsfor corporate bond issuance, rates, issuance approach in domestic andinternational markets, information disclosure and reporting mechanisms.
Under the draft, bond yields would not be allowed to behigher than 20 percent per year. This aimed to prevent firms from offering highbond yields which would negatively affect the capital market.
Bonds issued in the domestic market would be restricted fromtrading among less than 100 investors, while under the current regulation thisrestriction was applied only for the first year. This aimed to protect bondinvestors, the finance ministry said.
Two issuances must be at least six months apart, according tothe draft.
Notably, issuing companies must ensure the outstanding valueof bond issued would not exceed three times their charter capital. The financeministry said the regulation would help prevent firms from issuing bonds of toolarge a volume or value which would bring risks to both issuers and investors.
Tightening regulations was a way to fill in legislativeloopholes in the bond market, not for the purpose of squeezing it, said anexpert.
In the first two months of this year, total corporate bondissuance reached 19.4 trillion VND (841 million USD) with an average term of4.75 years and average interest rate of 10.07 percent. In particular, realestate businesses issued 11.6 trillion VND, accounting for 60 percent.
According to the Hanoi Stock Exchange (HNX), multi-sectorSovico Group JSC, the founder of Vietjet Aviation Joint Stock Company,organised four bond issuances from March 3-6, earning 500 billion VND with a100 percent success rate. The bond lots have a term of 3 years and an interestrate set at 11 percent per year, the investors were not disclosed.
Since the beginning of 2020, Sovico has offered bonds with atotal value of 2.05 trillion VND, all non-convertible an interest rate of 11percent per year with no collateral.
Since Sovico joined the corporate bond market in the middleof last year, the group has organised 70 bond issuances, earning about 10trillion VND.
Including bond issuances made by Sovico's affiliates in thattime, namely Bac My An Tourism Joint Stock Company, Vietjet Aviation JSC,Saigon Vina Real Estate JSC and Thuy Duong Hotel Co Ltd, the total number hit105, with total earnings of nearly 15 trillion VND.
Sovico Group currently has 9.6 trillion VND in chartercapital.
TNR Holdings Vietnam Real Estate Investment and DevelopmentJoin Stock Company organised 60 bond issuances in January 2020, accounting formore than half of the 102 successfully held across the whole market in themonth.
On February 14, the company revealed it had made another 40public offerings from November 13, 2019 to February 13, 2020. These bonds wereall privately issued with no collateral.
HCM-City based Vinametric Co Ltd in December 2019 organised24 bond issues - about one a day.
At the end of 2019, Vinametric's equity was recorded atnearly 1.98 trillion VND./.
“However, the booming growth of the corporate bond marketimplied significant risks as firms are issuing more bonds without clarifyingthe purpose of the capital they're trying to raise, repayment plans or bondyields,” Bao said.
In a move to change the status quo, the ministry has madepublic a draft decree to amend several points of Decree 163/2018/NĐ-CP aboutcorporate bond issuance for comment in order to manage and monitor the currentrapid growth of the corporate bond market.
This move would help prevent risks which might arise from theabuse of this capital raising channel, Bao said.
The newly-released draft includes amendments to conditionsfor corporate bond issuance, rates, issuance approach in domestic andinternational markets, information disclosure and reporting mechanisms.
Under the draft, bond yields would not be allowed to behigher than 20 percent per year. This aimed to prevent firms from offering highbond yields which would negatively affect the capital market.
Bonds issued in the domestic market would be restricted fromtrading among less than 100 investors, while under the current regulation thisrestriction was applied only for the first year. This aimed to protect bondinvestors, the finance ministry said.
Two issuances must be at least six months apart, according tothe draft.
Notably, issuing companies must ensure the outstanding valueof bond issued would not exceed three times their charter capital. The financeministry said the regulation would help prevent firms from issuing bonds of toolarge a volume or value which would bring risks to both issuers and investors.
Tightening regulations was a way to fill in legislativeloopholes in the bond market, not for the purpose of squeezing it, said anexpert.
In the first two months of this year, total corporate bondissuance reached 19.4 trillion VND (841 million USD) with an average term of4.75 years and average interest rate of 10.07 percent. In particular, realestate businesses issued 11.6 trillion VND, accounting for 60 percent.
According to the Hanoi Stock Exchange (HNX), multi-sectorSovico Group JSC, the founder of Vietjet Aviation Joint Stock Company,organised four bond issuances from March 3-6, earning 500 billion VND with a100 percent success rate. The bond lots have a term of 3 years and an interestrate set at 11 percent per year, the investors were not disclosed.
Since the beginning of 2020, Sovico has offered bonds with atotal value of 2.05 trillion VND, all non-convertible an interest rate of 11percent per year with no collateral.
Since Sovico joined the corporate bond market in the middleof last year, the group has organised 70 bond issuances, earning about 10trillion VND.
Including bond issuances made by Sovico's affiliates in thattime, namely Bac My An Tourism Joint Stock Company, Vietjet Aviation JSC,Saigon Vina Real Estate JSC and Thuy Duong Hotel Co Ltd, the total number hit105, with total earnings of nearly 15 trillion VND.
Sovico Group currently has 9.6 trillion VND in chartercapital.
TNR Holdings Vietnam Real Estate Investment and DevelopmentJoin Stock Company organised 60 bond issuances in January 2020, accounting formore than half of the 102 successfully held across the whole market in themonth.
On February 14, the company revealed it had made another 40public offerings from November 13, 2019 to February 13, 2020. These bonds wereall privately issued with no collateral.
HCM-City based Vinametric Co Ltd in December 2019 organised24 bond issues - about one a day.
At the end of 2019, Vinametric's equity was recorded atnearly 1.98 trillion VND./.
VNA
