Bond misconduct raises red flag among lawmakers

The alleged violations of An Dong Investment Group and other companies like property developer Tan Hoang Minh have damaged the sustainability of the capital market and caused a loss of trust among citizens, Vu Hong Thanh, chairman of the Economic Committee of the National Assembly, told a meeting Tuesday.

An Dong, a company within the “ecosystem” of property developer Van Thinh Phat, has recently been accused of involvement in bond issuance fraud after Van Thinh Phat Chairwoman Truong My Lan was arrested last week for alleged illegal trading of bonds worth trillions of Vietnamese dong (VND1 trillion = $417.78 million).

An Dong from 2018 to 2019 issued bonds three times totaling some VND25 trillion ($1.04 billion) with a term of five years. Its bonds issued in September 2018 and slated for maturity in September 2023 are non-convertible bonds, without a payment guarantee, and not guaranteed by assets, according to the Hanoi Stock Exchange.

Although authorities have not revealed specific details on the alleged violations related to the bond issuances, investors who have bought An Dong bonds are concerned they might lose their money after Lan and three other people were arrested.

Earlier, Hanoi-based Tan Hoang Minh, a major real estate developer, saw its chairman and five executives arrested in April over alleged fraud in nine bond issuances worth VND10 trillion.

But Minister of Finance Ho Duc Phoc said Monday his ministry has worked with bond issuers to ensure investors will get their money back.

“Issuers have pledged to pay when their bonds mature. We will actively monitor and ensure investor interests.”

A government report shows that around 440 bonds are being listed currently, with average trading per session in September reaching VND7 trillion, up nearly 14% from August.

Thanh was also concerned about ties between the capital market and property market as the government’s report pointed out that property developers are using short-term loans for long-term projects, which could result in big risks for lenders.

“The government needs to identify risks and come up with a specific solution to ensure the sustainability of the markets and develop the economy,” he added.