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Finance experts have found two new regulations stipulated in the decree. Regarding the separate bond issuance, the new decree does not set a limit on the rights of issuers and does not require issuers to make profits in the previous year.
Under decree 90, businesses could issue corporate bonds only if it profits were made in the year just before the year of issuance. The regulation was not in line with international practice. The requirement made it impossible for many businesses to issue bonds. Meanwhile, it was getting more difficult to access bank loans.
Ha Huy Tuan, deputy chair of the National Finance Supervisory Council, commented that the corporate bond market has not developed well enough to serve as a capital channel for enterprises.
The outstanding debt of the corporate bond market is estimated to make up 7 percent of GDP, which is much lower than the average level of 21 percent in the region. The underdevelopment of the bond market is another reason behind the challenges in long-term capital mobilization.
Tuan believes that once the regulations on corporate bond issuance are loosened, the market will be more bustling, and enterprises, especially small and medium sized, will think of seeking capital via bond issuance.
Issuing corporate bonds is the choice of large corporations. The stable bond interest rates will allow enterprises to easily plan their business.
According to Standard Chartered Vietnam, since mid-2018, it has successfully arranged bond issuance for some large businesses, including REE (refrigeration engineering), PAN and Nam Long.
In early 2019, REE successfully issued VND2.318 trillion ($100 million) worth of 10-year bonds at the fixed interest rate of 7 percent per annum.
Prior to that, PAN also successfully issued its first bond issuance campaign with the value of VND1.135 trillion and the interest rate of 6.8 percent per annum, valid for the entire five years.
As for Nam Long, it issued VND660 billion worth of bonds, 7-year term, with the fixed interest rate of 6.5 percent.
Bui Quang Tin from the HCMC Banking University said though some requirements have been loosened, the new decree still sets strict requirements on information transparency, especially on credit ratings and businesses’ data exposure.
Phan Dung Khanh, a finance & securities expert, said that bond issuers are mostly well-known profitable businesses. Small unlisted companies with a lack of transparency do not have opportunities to issue bonds even though the regulations have been loosened.