Decree 08 takes effect from March 5, 2023. Some major changes include: Issuers can pay principal and interest on bonds due with other assets, and can extend the bond term to a maximum of 2 years with the consent of bondholders.
Notably, this Decree postpones regulations on professional securities investors, bond distribution time of each issuance and credit rating requirements for bond-issuing enterprises until December 31, 2023.
Suspicion of vested interests in credit ratings
Speaking at the seminar "Solutions to unclog the capital market" organized by Nha Dau Tu Magazine on the morning of March 17, Mr. Do Ngoc Quynh - General Secretary of the Vietnam Bond Market Association affirmed that credit rating should not be postponed.
The reason is that this is the decisive factor, a temporary solution to help TPDN regain investors' trust by publicly and transparently disclosing its information.
Mr. Nguyen Son - Chairman of the Depository Center, State Securities Commission, disagreed with the above opinion. Specifically, Mr. Son said that Decree 08 has amended some articles of Decree 153 and postponed the implementation of some provisions of Decree 65.
Previously, Decree 65 was issued at a time when the market was developing too hot, so it had to be tightened to ensure stability, proposing the story of re-stipulating the concept of professional securities investors and businesses wanting to issue bonds were required to have a credit rating.
“But the question here is whether it is really necessary to require a credit rating when issuing individual corporate bonds?”, Mr. Son questioned.
Accordingly, Mr. Son explained that in the Vietnamese market, there are currently very few professional credit rating organizations, while the number of businesses needing to issue bonds is extremely large and the rating process takes at least 2-3 months.
At the same time, credit rating companies are currently private organizations, not state-owned enterprises. If the demand for credit ratings is large and the demand is not enough, Mr. Son believes that there may be a story of private interests, and businesses and credit institutions will be able to "contact privately".
“In my opinion, at this time, it is not necessary to make the rating mandatory and postponing it until the end of 2023 is necessary so that we have enough resources to develop credit rating organizations,” Mr. Son affirmed.
Mr. Nguyen Son - Chairman of the Depository Center, State Securities Commission.
As a leader of a credit rating enterprise, Mr. Le Xuan Dong - CEO of Market Research and Consulting Services Division of FiinGroup affirmed that regarding Decree 08 as well as the revised Decree 65, the enterprise completely agrees with the direction of the Ministry of Finance as well as the Government in supporting the market, supporting enterprises and investors.
In addition, Mr. Dong shared that in order to provide credit rating services, the rating organization itself had to prepare very carefully in terms of both human resource quality and expertise.
“As Mr. Nguyen Son said, when the number of businesses with credit rating needs is large, we also realize that there needs to be more credit rating agencies to share the work,” said Mr. Dong.
However, the business leader affirmed that professional ethics is the number one issue in the credit rating profession.
“There are also regulations on trading and bond ownership to avoid conflicts between rating agencies. Is there collusion between credit rating agencies? It is like auditing, completely independent.
“If any employee is found to have a relationship with or own bonds or stocks of a company using FiinGroup’s credit rating service, they will be fired immediately. This is a taboo,” Mr. Dong affirmed.
More attention needs to be paid to systemic risk
Assessing the overall picture of the newly issued Decree 08, Mr. Can Van Luc - Chief Economist of BIDV Bank, commented that this is a temporary solution, helping to remove the current difficulties for the market.
However, in order for the market to develop healthily and limit risks, long-term, macro measures are needed to overcome major weaknesses such as the legal corridor and market management regulations, market infrastructure (trading system, credit rating companies, etc.) as well as investor base.
Specifically, Mr. Luc suggested that we need to pay attention to 7 key measures.
Firstly , resolutely direct the quick, decisive and strict resolution of recent violations in corporate bond issuance to regain investors' confidence.
"This will help the corporate bond market recover quickly, creating conditions for businesses to access capital for investment, production and debt restructuring, ensuring that the economic recovery process is not interrupted," Mr. Luc explained.
Second, it is necessary to quickly reform procedures and conditions, shorten the time for granting issuance licenses to create conditions and have policies to encourage businesses to issue bonds to the public.
Third, there should be a policy to encourage credit rating and publish credit rating information for businesses in general (not just for corporate bond issuance).
Fourth, improve the infrastructure of the corporate bond market such as a centralized secondary market, a database of bonds and collateral, etc. to increase liquidity and attract more investment capital from within and outside the country.
Mr. Can Van Luc - Chief Economist of BIDV Bank.
Fifth, perfect the market management and supervision mechanism, such as the management mechanism for post-issuance bonds such as collateral management, cash flow monitoring, capital use purpose management, etc. Increase the level of sanctions for violations.
Sixth, improve the quality of individual investors in the market by enhancing financial education for individual investors and introducing policies to encourage the development of institutional investors.
Finally, the Vietnamese corporate bond market is an inseparable component of the financial and real estate markets, so management and development orientation need to be closely linked to the financial system, and the application of information disclosure standards, system safety, etc. need to be closely monitored by appropriate management agencies, with a more independent capacity.
In addition, Mr. Luc also recommended paying more attention to systemic risks, spreading between banking - securities - insurance - real estate.
Accordingly, improving the effectiveness of coordination between management agencies is very important, along with building a financial safety net, increasing the independence and capacity of inspection and supervision agencies as well as the role of deposit insurance. Along with that, there is also a need for a project to soon upgrade the market.
"This is a story that requires the synchronous participation of ministries, departments, branches, and leading agencies. I also hope that the State Securities Commission will have a higher position and role, and be more independent because the market size is getting bigger and bigger," Dr. Can Van Luc commented further .
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