Promoting more transparent and healthy businesses
According to the provisions of the Law amending and supplementing a number of articles of the Enterprise Law recently passed by the National Assembly , from July 1, 2025, non-public companies when issuing individual corporate bonds must ensure that the total debt payable, including the value of the bonds expected to be issued, does not exceed 5 times the owner's equity.
This is one of the important measures to control financial risks in the corporate sector, but does not cause significant disruption to the market.
According to statistics from the Hanoi Stock Exchange, in 2024, only 13 enterprises issuing individual bonds (excluding banks) had a debt-to-equity ratio exceeding 5 times at the time of offering. This shows that the new regulation will not affect the majority of enterprises currently participating in the individual bond market.
Experts also agree that this regulation is a necessary and positive step. Mr. Nguyen Quang Huy, CEO of the Faculty of Finance and Banking, Nguyen Trai University, commented: “The new regulation mainly has a short-term impact on the group of enterprises using high financial leverage, especially in the real estate sector. However, in the medium and long term, this is an important driving force to encourage enterprises to restructure their financial strategies in a more sustainable and transparent direction.”
In fact, over the years, many businesses, especially real estate businesses, have abused individual bonds as an easy capital mobilization channel, despite the business model having a long payback period and high risk. Tightening the financial leverage ceiling will force these businesses to change and not be able to continue to rely on bonds as before.
As the door to private placement narrows, businesses will have to seek higher-standard capital mobilization channels such as issuing bonds to the public, IPOs, strategic share offerings, or borrowing from banks.
The common point of these channels is that they require businesses to be transparent in information, have a healthy financial foundation and comply with higher governance standards, which is the foundation for the sustainable development of the capital market.
Ms. Pham Thi Thanh Tam, Deputy Director of the Department of Financial Institutions ( Ministry of Finance ), affirmed that the limitation of leverage ratio is not intended to cause difficulties, but to ensure that issuing enterprises have sufficient payment capacity, protect investors' rights and strengthen the safe, public and transparent development of the corporate bond market.
“This is the right move, helping to filter out weak businesses, while creating a fair competitive environment and encouraging businesses to professionalize their financial activities. Businesses that are truly capable will not worry about lack of capital, but on the contrary, will increase their chances of accessing quality investors,” Ms. Tam emphasized.
This is not only an important "fence" to protect investors from the risk of default, but also creates pressure for businesses to restructure their capital sources in a healthier and more sustainable direction.
Increasing pressure on capital restructuring
The tightening of conditions for issuing private corporate bonds for non-public companies is considered one of the key steps to reduce the risk of default, tighten financial discipline, and protect individual investors, the most vulnerable force in the market. Not only does the new regulation act as a “blocking point” for risks, it also creates strong pressure for businesses to restructure their capital sources in a safer and more sustainable direction.
According to the regulation that will take effect from July 1, 2025, the total liabilities of a non-public company, including the value of bonds expected to be issued, must not exceed 5 times the owner's equity. Mr. Nguyen Quang Huy, CEO of the Faculty of Finance and Banking, Nguyen Trai University, said that this is an effective tool to improve financial discipline.
“The tightening of leverage ratios forces businesses to look at themselves, strengthen their financial capacity, restructure their assets, optimize cash flow and make their business operations transparent. In other words, this regulation will force businesses to become more mature in their capital mobilization strategies,” Mr. Huy emphasized.
However, experts also believe that this regulation is not a "magic wand" that can immediately resolve all risks in the bond market. Mr. Nguyen Dinh Duy, Director, Senior Analyst at VIS Rating, pointed out that, in fact, high financial leverage is not the main cause of late bond repayments.
VIS Rating data shows that among the 182 businesses that are late in paying their bonds, most of them are not due to excessive financial leverage, but due to poor cash flow management, liquidity imbalances and unstable business models. According to Mr. Duy, “leverage is one of many risk factors, but what investors need to care about more is the ability to generate real cash flow and manage the finances of the business.”
Therefore, to develop the corporate bond market in a healthy manner, measures to tighten leverage need to be accompanied by a series of synchronous solutions. Mr. Nguyen Quang Huy proposed to soon promote the development of an independent credit rating system, enhance the role of auditing units, issuance consulting organizations and banks monitoring cash flow.
At the same time, opening up the corporate bond market to the public, in addition to the private issuance channel, will create more choices and transparency for investors. At the same time, the market also needs to diversify products, from short-term bonds, green bonds to guaranteed bonds or bonds linked to business performance.
Not only management agencies or issuing enterprises, but also intermediary organizations and investors need to improve awareness and capacity, thereby contributing to the formation of a bond market that develops substantially, sustainably and professionally.
On the management side, Ms. Pham Thi Thanh Tam, Deputy Director of the Department of Financial Institutions (Ministry of Finance), said that the Ministry of Finance is currently coordinating with relevant ministries and branches to submit to the Government to amend and complete four important decrees, including: decree on public bond issuance; issuance of individual corporate bonds; sanctions for violations in the securities sector (including additional sanctions related to individual bonds); and decree on credit rating.
These are expected to be important "pieces" to help strengthen the legal framework for the bond market, thereby improving transparency, minimizing risks and regaining investor confidence.
Source: https://baolamdong.vn/siet-don-bay-trai-phieu-doanh-nghiep-chan-nguy-co-vo-no-thuc-ep-tai-co-cau-von-348648.html
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