The corporate bond market in Vietnam
The corporate bond market in Vietnam has been growing rapidly.
The market emerged from the beginning of 2000s. From 2010s, it started to develop. In the recent years, it becomes a noticeable way of capital mobilization.
There are two ways of issuing bonds, including private placement and public offering. Private placement is dominant, accounting for over 90% of all bonds in the market.
The size of corporate bond market in 2021 was equivalent to 18% of Vietnam’s GDP.
From 2019 to quarter I/2022, 960 enterprises issued privately placed corporate bonds, through over 4.000 offerings with the total value of 60 billions USD. That is an average of 13 billions USD per year, nine times higher the period from 2011 to 2015.
In 2021, the total issuing value hit the record of 27 billions USD, an increase of 39% compared to 2020. The size of corporate bond market in 2021 was equivalent to 18% of Vietnam’s GDP.
From 2021 to 2022, financial institutes are the biggest issuers, accounting for 40% of all bonds. Real estates enterprises are the runner-up. Other sectors include commerce and services, securities, construction…
Basic rules on privately placed corporate bonds
Privately placed corporate bonds are mainly regulated by the Law on Securities 2019 and Decree 153/2020/ND-CP (issued in 2020 and amended in 2022).
The currency used in issuance and payment of bond principals and interests must be VND. The face value of a bond can be 100.000.000 VND or a multiple thereof.
The bond issuance purposes must be specified in the issuer’s bond issuance plan and disclosed to investors registering for purchase of bonds. In particular, bonds are issued for executing investment projects, restructuring the issuer’s funding sources or serving other purposes prescribed in specialized laws. The funds raised from a bond issue must be used for the purposes specified in the issuer’s bond issuance plan and notified to investors.
The face value of a bond can be 100.000.000 VND or a multiple thereof.
In order to carry out the offering of non-convertible bonds without warrant (except the offering of bonds by securities companies or fund management companies that are not public companies), the issuer is required to meet, among others, the following requirements:
- It is a joint-stock company or limited liability company duly established and operating in Vietnam.
- It has fully paid principals and interests of bonds issued or due debts in the last 03 consecutive years preceding the bond offering (if any), except the offering of bonds to creditors that are selected financial organizations.
- It has maintained adequacy ratios and prudential ratios in operations in accordance with regulations of specialized laws.
- Its financial statements of the year preceding the year of issuance have been duly audited by an accredited audit organization according to regulations herein.
Bonds are issued for executing investment projects, restructuring the issuer’s funding sources or serving other purposes.
After that, bonds can be issued by the following four methods:
- Bidding: to select investors that meet the issuer’s requirements to buy bonds.
- Underwriting: to corporate bonds to investors through an underwriter or underwriter syndicate.
- Brokerage: the issuer authorizes another entity to sell its corporate bonds to investors.
- Selling bonds directly to investors in case the issuer is a credit institution.
