“Relieved” because of debt rescheduling and asset swap in 2024, bond businesses still need to pay attention to 3 points

Deputy Minister of Finance Nguyen Duc Chi has just chaired a meeting with ministries, central agencies, associations and businesses to get opinions and evaluate the implementation of Decree No. 08/2023/ND-CP dated May 5/ 3/2023 amending, supplementing and suspending the implementation of a number of articles in the Decrees regulating the private offering and trading of corporate bonds in the domestic market and offering corporate bonds to the market international (Decree 08); At the same time, policy orientation in the coming time.

MARKET WARMING, LIGHTING BOND DEBT BURDEN FOR THE IMMEDIATE

After the incident of SCB Bank and Van Thinh Phat Group, the corporate bond market fluctuated strongly, investors lost confidence and required businesses to buy back bonds before maturity, businesses had difficulty issuing bonds. issue new bonds.

At the same time, the macroeconomy and financial markets at home and abroad are complicated, interest rates are increasing, and the economy’s liquidity is facing difficulties.

Faced with that situation, the Government issued Decree 08 postponing some regulations in Decree No. 65/2022/ND-CP (Decree 65) until December 31, 2023 to neutralize the legitimate interests of businesses. Issuers and investors buy bonds in the spirit of “harmonious benefits, shared difficulties”. From there, support businesses to issue bonds to mobilize capital, pay due debt obligations to investors and continue production and business activities.

According to the provisions of Decree 08, businesses can negotiate with bond owners to pay principal and interest on due bonds with other assets. Along with that, bonds issued before Decree 65 took effect were negotiated to extend the maximum term to no more than 02 years.

At the same time, the enforcement of 03 contents specified in Decree 65 will be suspended until December 31, 2023, including: identifying professional securities investors as individuals who buy individual corporate bonds, Mandatory credit rating and reduced bond distribution time.

Reporting at the meeting, Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance of Banks and Financial Institutions (Ministry of Finance), said that the Ministry of Finance has proactively deployed solutions to stabilize the market. .

According to assessments, the Ministry of Finance submitted Decree 08 to the Government, contributing to helping businesses have more time to handle immediate difficulties related to bonds.

In addition, the Ministry of Finance regularly monitors and urges businesses to pay bond debt; At the same time, strengthen inspection, supervision, correction and handling of violations. Communication work has also been enhanced to restore investor confidence.

“From the second quarter of 2023 until now, the market has gradually stabilized. Since Decree 08 took effect until November 3, 2023, according to tracking data of the Hanoi Stock Exchange, There are 68 private issuance enterprises with a volume of 189.7 trillion VND.”

Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance of Banks and Financial Institutions (Ministry of Finance).

The outstanding debt of individual corporate bonds at the end of October 2023 is about 1 million billion VND, accounting for 10.5% of GDP in 2022, equal to 8% of the total outstanding credit debt of the economy.

Evaluating the implementation of Decree 08, representatives of the Department of Finance of banks and financial institutions said that in recent times, businesses have had difficulty with liquidity, leading to the possibility of late payments of principal and interest. Corporate bonds actively negotiate with investors to pay bond principal and interest with other assets, mainly real estate products.

At the same time, extend the bond term or change other conditions and terms of the bond such as: changes in time, method, frequency of payment of bond principal and interest. Up to now, many businesses have tried many ways to reduce short-term bond debt to zero, or many businesses that are slow to pay are “relieved” because they can negotiate with investors.

According to a newly published report by MB Securities Company (MBS), as of mid-November 2023, there were about 100 businesses announcing the delay or postponement of bond principal and interest payments. The total value of corporate bonds and corporate bonds with delayed payment obligations is about 192,000 billion VND, accounting for nearly 19% of outstanding corporate bond debt of the entire market.

Among them, the real estate industry continues to account for an overwhelming proportion, about 70% of the value of late payments, such as: Hung Thinh Land, Trung Nam Group, Novaland, Dat Xanh Mien Nam…

This policy creates a legal basis for businesses to negotiate with investors to restructure bond debt, reducing debt repayment pressure. Thereby, businesses have time to adjust the scale of operations, restore production and business to create cash flow to repay debt.

Regarding regulations in Decree 08 on payment of bond principal and interest using other assets and bonds issued before Decree 65 takes effect are negotiated to extend the maximum term to no more than 02 years, representative The Ministry of Finance emphasized that these policies will continue to be implemented in the coming time.

THREE REGULATIONS ARE COMING BACK IN EFFECT

Also at the meeting, the majority of opinions agreed with the Ministry of Finance’s proposal that it is not necessary to extend the period of suspension of enforcement of regulations defining professional securities investors as individuals buying bonds. individual enterprise.

According to the Ministry of Finance’s explanation, Decree 65 stipulates that professional securities investors who are individuals must ensure that their holding portfolio has an average value of at least VND 2 billion within 180 days using the investor’s assets. investment, excluding loans.

To maintain the demand for buying corporate bonds of individual investors who have financial potential but have not accumulated the full 180 days as prescribed in Decree No. 65 and the market has more time to adjust, Decree No. Decree No. 08 stipulates to suspend the implementation of the above regulations in Decree 65 until December 31, 2023.

“Up to now, after more than 8 months of implementing Decree 08, professional securities investors are individuals who have accumulated 180 days to meet the regulations for professional securities investors in Decree 65, so they do not need to It is necessary to extend the effective suspension period of this regulation”, assessed the representative of the Ministry of Finance.

In addition, the securities law also stipulates other ways to identify ongoing professional securities investors such as having a securities practice certificate and having a taxable income in the most recent year of at least 01 billion. copper.

Furthermore, the implementation of regulations identifying professional securities investors in Decree 65 will minimize distribution risks, inviting individual investors who are not professional securities investors to buy bonds, Enhance the safety and sustainability of the corporate bond market.

Regarding the policy of suspending the enforcement of credit rating regulations, the Ministry of Finance also proposed not to extend the suspension period of mandatory credit rating regulations for individual corporate bonds.

Previously, in the context of businesses having difficulty mobilizing capital to serve production and business activities, meanwhile, implementing credit ratings took a certain amount of time and increased issuance costs of the company. businesses, therefore, Decree 08 stipulates to suspend the implementation of regulations on credit ratings for individual corporate bonds until December 31, 2023.

Furthermore, only a few cases that meet all the conditions require a credit rating, so the number of issuances that must have a credit rating is expected to be limited. Therefore, the Ministry of Finance believes that continuing to implement regulations in Decree 65 will not have any problems.

In addition, at that time in the market there were only 02 licensed credit rating businesses. Currently, the Ministry of Finance also licenses 01 additional enterprise, the total number of enterprises that can provide credit rating services is 03 out of the maximum allowed total of 05 credit rating enterprises, of which There is a business that has a joint venture with an international credit rating organization.

At the meeting, the Ministry of Finance also said that it is not necessary to extend the period of suspension of enforcement of regulations on reducing bond distribution time.

Decree 65 stipulates that the bond distribution time of each offering does not exceed 30 days (the previous regulation in Decree No. 153 was 90 days, similar to corporate bonds offered to the public).

The goal of this regulation is to limit businesses from taking advantage of the long bond distribution period and inviting small individual investors who are not professional securities investors to buy bonds.

To date, the Ministry of Finance believes that market liquidity has returned to stability. To limit risks to the corporate bond market, limit the situation where businesses take advantage of distribution and invite small individual investors who are not professional securities investors to participate in buying bonds, do not It is necessary to extend the period of suspension of enforcement of this regulation.

POLICY AMENDMENTS FOR MARKET SUSTAINABLE DEVELOPMENT

Speaking at the meeting, Deputy Minister of Finance Nguyen Duc Chi said that the Ministry of Finance will absorb both opinions related to the above proposals and consider carefully to come up with appropriate plans. with the actual situation.

For opinions related to technical issues, the Ministry of Finance will assign relevant units to research and have clear regulations to propose to the Government, aiming to continue to stabilize and develop the market. .

“The Ministry of Finance will try to build the bond market in general and individual corporate bonds in particular to develop sustainably,” the Ministry of Finance leader emphasized.

To continue to stabilize and develop the corporate bond market, the Ministry of Finance reports to the Government leadership on a series of overall solutions.

Specifically, for solutions on mechanisms and policies in the medium and long term, the Ministry of Finance reports to Government leaders for overall review, research and reporting to competent authorities to amend regulations on issuance. individual corporate bonds and related persons in the Securities Law, Enterprise Law and related laws.

Along with that, review, complete and improve the effectiveness of implementing legal regulations on corporate bankruptcy so that businesses have enough procedures to carry out bankruptcy in an orderly manner.

In addition, the Ministry of Construction researches and submits to competent authorities to supplement regulations on financial safety indicators in the fields of construction and real estate.

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