Vietnam plans tighter rules on bond issuance after frauds
Overhaul aims to boost investment in company debt – a major source of funding for the country’s weak real estate sector
Published Tue, Oct 29, 2024 · 05:37 PM
VIETNAM’S finance ministry outlined tighter regulations for the country’s corporate debt market on Tuesday (Oct 29), with the proposals aimed at restoring investor confidence eroded by several high-profile frauds involving company bond sales.
Under the plans, corporate issuers would need to meet new requirements, including having their debt rated and disclosing their debt ratio.
Additionally, retail investors would face more curbs. For instance, they would only be able to trade debt securities backed by a collateral. Institutional investors would not be affected.
The proposed reforms, which need approval from Vietnam’s parliament, are part of a broader overhaul of the little-regulated market aimed at boosting investment in company debt, which was a major source of funding for the nation’s weak real estate sector.
Vietnam’s bond market came to a virtual standstill in late 2022 following the arrest of real estate tycoon Truong My Lan, who earlier this month got a life sentence for misappropriating about 30 trillion dong (S$1.6 billion) from investors through bond issuance.
It has partly recovered since then, and new issuance in the first nine months of the year reached 334 trillion dong, matching the total for 2023, with no new defaults reported in September, indicated Moody’s affiliate Vis Ratings.
The proposed reforms, which need approval from Vietnam’s parliament, are part of a broader overhaul of the little-regulated market aimed at boosting investment in company debt, which was a major source of funding for the nation’s weak real estate sector.
Vietnam’s bond market came to a virtual standstill in late 2022 following the arrest of real estate tycoon Truong My Lan, who earlier this month got a life sentence for misappropriating about 30 trillion dong (S$1.6 billion) from investors through bond issuance.
It has partly recovered since then, and new issuance in the first nine months of the year reached 334 trillion dong, matching the total for 2023, with no new defaults reported in September, indicated Moody’s affiliate Vis Ratings.
Previous government efforts on similar reforms were poorly received by the market, delaying regulatory advances.
If passed by the country’s parliament, the amendments to its securities law would take effect in 2026. REUTERS
