Tightening the leverage ratio of enterprises when issuing private bonds is not a barrier to the market (Photo: Dung Minh) |
Does not affect the capital mobilization of the enterprise
According to 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 private bonds must have total liabilities (including the value of the bonds expected to be issued) not exceeding 5 times the owner's equity.
According to statistics from the Hanoi Stock Exchange, in 2024, there will be 13 enterprises issuing individual bonds on the market (excluding commercial banks) with outstanding loans on equity at the time of offering corporate bonds of over 5 times equity. Therefore, the above regulation does not affect too many enterprises and the entire individual corporate bond market.
- Ms. Pham Thi Thanh Tam, Deputy Director of Financial Institutions Department ( Ministry of Finance )
In recent times, in order to develop the corporate bond market in a safe, public, transparent and sustainable manner, the Ministry of Finance has focused on perfecting the legal framework and regularly disseminating the law to issuers and investors. We hope that issuers, investors, service providers, etc. will comply with the law to join hands in building a safe and sustainable corporate bond market.
Experts also highly appreciate the above regulation. Mr. Nguyen Quang Huy, CEO of the Faculty of Finance and Banking, Nguyen Trai University, said that the new regulation only has a short-term impact on the group of enterprises that depend heavily on borrowed capital, especially real estate enterprises. However, in the medium and long term, tightening the leverage ratio will be very positive for the market, as well as the capital structure activities of enterprises.
“For a long time, real estate businesses have used high financial leverage, long payback periods and relied heavily on individual bond channels. With the new regulations, businesses will have to restructure their capital mobilization strategies in a more sustainable direction,” said Mr. Huy.
According to analysts, when issuing individual corporate bonds is no longer as easy as before, businesses are forced to find many other ways to raise capital such as issuing bonds to the public, offering shares for the first time to the public (IPO), selling capital, borrowing from banks... All of these capital mobilization channels require businesses to strengthen their financial strength and operate more transparently and professionally.
Ms. Pham Thi Thanh Tam, Deputy Director of the Department of Financial Institutions (Ministry of Finance) affirmed that the tightening of regulations on leverage when issuing individual corporate bonds of non-public companies aims to limit bond payment risks, improve the capacity of issuing enterprises, and help the corporate bond market develop safely, publicly, transparently, and sustainably. The new regulations do not cause difficulties for the issuance of individual corporate bonds, but still ensure the rights and interests of investors.
Increasing pressure on capital restructuring for businesses
Tightening conditions for issuing private bonds for non-public enterprises is a solution to minimize the risk of default, a "stopper" to protect small investors, thereby increasing confidence in the market.
According to Mr. Nguyen Quang Huy, the regulation that non-public companies when issuing individual bonds must have total liabilities (including the value of the bonds expected to be issued) not exceeding 5 times the owner's equity will help businesses improve financial discipline, giving them more motivation to restructure their capital structure. "The tightening of financial leverage ratios will force businesses to strengthen their financial capacity, restructure assets, optimize cash flow and be transparent in operations," Mr. Huy affirmed.
Appreciating the above regulation, experts say that the regulation on tightening leverage ratio is not a "magic wand" to protect investors.
According to Mr. Nguyen Dinh Duy, Director - Senior Analyst of VIS Rating, the regulation on tightening financial leverage ratio does not significantly affect the private bond issuance activities of enterprises. In fact, high leverage ratio is not the main cause of late bond repayment.
VIS Rating data shows that the reason why 182 businesses are currently late in paying their bonds is not due to high leverage, but mainly due to weak cash flow and poor liquidity management. Therefore, although leverage is one of the risks to consider, investors should consider many factors when deciding to invest in individual corporate bonds, especially the ability to generate cash flow.
According to Mr. Nguyen Quang Huy, the above regulation will help the bond market become healthier and more sustainable, but for the market to recover, many other synchronous solutions are needed such as promoting the credit rating market, enhancing the role of auditing units, issuance consulting organizations and banks monitoring cash flow, promoting the corporate bond market issued to the public in parallel with the individual corporate bond market, diversifying bond products... In addition, investors, enterprises and intermediaries must mature for the bond market to develop healthily and sustainably.
Ms. Pham Thi Thanh Tam said that the Ministry of Finance is presiding over and coordinating with ministries and branches to submit to the Government amendments to 4 decrees related to public bond issuance, private corporate bond issuance, sanctions for violations in the securities sector (supplementing regulations on sanctions for violations related to private corporate bonds), and credit rating.
Source: https://baodautu.vn/siet-ty-le-don-bay-khi-phat-hanh-trai-phieu-doanh-nghiep-giam-nguy-co-vo-no-tang-dong-luc-co-cau-von-d318868.html
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