Finance ministry seeks to ease bond market difficulties

In a draft decree that is being reviewed by other government agencies, the ministry has proposed that bonds can have their maturity extended by a maximum of two years if approved by at least 65% of holders.

Current regulations do not allow changes to tenor after issuance.

It seeks to buy more time for businesses, ease their payment burden and allow them to restructure their debts.

The ministry also wants a decree which stipulates that businesses making large bond issuances should have credit ratings delayed from early next year to early 2024.

A large issuance is defined as being worth over VND500 billion ($20.83 million) and greater than 50% of the issuer’s equity.

The ministry said businesses are having difficulty mobilizing funds while credit ratings cost time and money to obtain.

It also proposed postponing by a year the requirement that only “professional” investors could buy bonds.

An earlier decree describes professional investors as those having an average stock portfolio of VND2 billion in the previous 180 days.

The decree is supposed to come into effect in early 2023, but the ministry wants it delayed until early 2024 to give more time for the market to stablize.

It also wants to delay until 2024 a decree that requires issuers to complete all remaining bond issuances within six months of a first.

Businesses bought back VND160.65 trillion worth of their bonds in the first 11 months, up 41% year-on-year, according to the Vietnam Bond Market Association. They issued around VND257 trillion worth of bonds in the period, down 60%, it added.