Regulations on corporate bond issuance
09:00 | 07/12/2018
VGP – The Government has recently issued Decree 163/2018/ND-CP on corporate business issuance. 

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Accordingly, enterprises which issue corporate bonds are responsible for capital borrowing, capital efficiency, and debt payment. 

Enterprises are allowed to issue private corporate bonds to implement their programs, investment projects; expand capital scale; restructure debts. However, they are obliged to make specific announcements to investors. 

Spending of capital mobilization from corporate issuance must ensure accurate targets and information disclosure.  

The new decree also regulates buying of corporate bonds ahead of time and bond swapping in favor of debt reduction or restructuring. 

In Viet Nam, besides the Government bond market which is gradually stabilizing and become a helpful tool for the restructuring of public debts, the corporate bond market is emerging as a potential channel to mobilize medium and long term capital for the economy.

According to the statistics from the Ministry of Finance, by the end of 2017, the outstanding debt of the corporate bond market was equivalent to 6.19% of GDP, up from the scale in 2011 (3.31% of GDP). The average volume of issued bonds in the period 2011 - 2017 was about VND 49 trillion / year, of which the issued volume in 2017 was more than 10 times higher than that of 2011.

Although the corporate bond market scale has grown in recent times, it is small compared to the scale of the bank credit channel (equivalent to 130% of GDP). Outstanding debts of Viet Nam’s corporate bond market is much lower than the average level of about 20% -50% of GDP of other countries in the region and is incommensurate with the economic potentials.

According to the Party’s and Government’s policies, the development of the bond market including the corporate bond market is an important direction to mobilize medium and long-term capital for the economy, as it gradually reduces dependence on banks and facilitates enterprises to raise the bond capital./.

By Kim Anh 

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