Revising Decree 153 to enhance transparency in corporate bond issuance

The press conference

At the press conference, Mr. Nguyen Hoang Duong, Deputy Director of Department of Banking and Financial Institutions, said that the corporate bond market has been developing in accordance with policies of the Party, National Assembly and Government and becoming an important medium and long-term capital mobilization channel, contributing to reducing dependence on bank credit. Since 2019, the volume of corporate bond issuance has soared, to about VND467 trillion/year on average.

Despite the positive results in terms of capital mobilization scale, the rapid growth of the market has also created new risks, affecting its development.

The Government issued Decree 65/2022/ND-CP amending and supplementing a number of articles of Decree 153/2020/ND-CP on the principle of complying with conditions of bonds issuance specified in the Law on Securities, the Law on Enterprises and supplementing regulations according to the Government's authority to continue developing a transparent and sustainable corporate bond market, protecting the interests of issuers and investors and overcome inadequacies in the market.

In addition, the Decree also strengthens management and supervision, including inter-connected supervision between the financial market sector, the banking credit sector and other sectors of the economy.

Responding to a reporter's question about the new points of Decree 65 contributing to enhancing the transparency of the corporate bond market, Mr. Nguyen Hoang Duong said that regarding the issuance conditions, Decree 65 does not add new regulations but increases transparency by requiring credit rating results in the private placement dossier under the roadmap of public offering in accordance with the current law.

Accordingly, Decree 65 stipulates that the conditions for bond issuance must comply with the provisions of the Law on Securities and the Law on Enterprises. The decree adds regulations on bond offering documents including credit rating results according to cases and roadmap as prescribed for bond offering to the public (from January 1, 2023); the offer documents must contain a contract signed with a representative of the bondholder in the offering to a professional securities investor who is an individual, and a commercial bank's confirmation of the opening of an account to receive money for bond purchase.

Regarding the liability requirements of the issuer, Decree 65 additionally stipulates that the enterprise must repurchase before the due date when it violates the issuance plan (including the capital use plan) or violates the law; before and after the issuance, there must be a disclosure of information on solvency, an audit report on the financial situation and the use of capital for the issuance purpose. Furthermore, the decree adds a provision that security assets of bonds must be valued and registered for security.

Mr. Duong added that the new decree also stipulates that the special content of the corporate bond information page at the Stock Exchange will add the publication of some financial indicators of the issuer, information on businesses that fail to fulfill their obligations of paying bond principal and interest and improperly use bond capital to reveal information about issuers to the public.

In order to improve the professionalism of investors, the new decree adds regulations to increase the professionalism of individual investors when buying privately placed corporate bonds, minimizing individual investors committing fraud to buy corporate bonds.

Specifically, the identification of professional securities investors by a securities portfolio must ensure that the portfolio must be valued at least VND2 billion within 180 days with the investor's assets, not including loans.

When buying bonds, investors must read, understand and sign a confirmation that they have knowledge of bonds and laws and accept risks on bonds (both in the primary and secondary market). The organization providing information and the organization certifying the status of a professional securities investor shall both sign this confirmation to confirm that they have provided sufficient information and documents to the investors.

Along with that, investors are not allowed to sell or contribute capital to invest in bonds with investors who are not professional securities investors.

Mr. Nguyen Hoang Duong also said that, in order to be transparent in private corporate bond offerings and transactions, the new decree also adds regulations to enhance transparency and law compliance of service providers.

According to Mr. Duong, Decree 65 will continue to support enterprises to mobilize medium and long-term capital. Enterprises must meet conditions on documents to increase the authentication and those who have good financial situation and good law compliance and disclose full information will have a good chance to mobilize capital.