New regulations create more transparent corporate bond market

New regulations create more transparent corporate bond market

A new draft decree on corporate bonds seeks to enhance transparency, tighten accountability, and strengthen oversight to rebuild investor confidence, and support capital market development.

Following the implementation of relevant government decrees, the legal framework governing the private placement corporate bond market has been progressively refined.

The real estate sector accounts for a large share of corporate bonds maturing this year

These regulations have helped firms mobilise medium- and long-term capital, eased pressure on bank credit, and reinforced the responsibilities of market participants.

However, certain provisions require further adjustment to better safeguard the interests of investors, while ensuring consistency with the law.

Building on the existing regulatory framework, the government’s draft decree on corporate bond issuance introduces a number of significant revisions aimed at enhancing transparency, tightening accountability, and strengthening supervision, thereby mitigating risks for investors and improving overall market quality.

Speaking at a workshop on effective capital mobilisation in Hanoi on March 12, Hoang Van Thu, Vice Chairman of the State Securities Commission, said the draft decree was designed to unlock and efficiently utilise resources for socioeconomic development, while enhancing market transparency and professionalism.

Accordingly, the draft introduces several key groups of new provisions.

First, regulations on issuance purposes and the management of proceeds have been expanded with more clarity.

While previous rules were primarily tied to certain specific forms of investment, the new draft allows for the full application of various forms, creating greater flexibility for enterprises to raise capital while still ensuring control over the use of proceeds.

Documentation requirements and procedural steps are classified into two groups: public offerings and non-public offerings. This approach helps segment investors and steers the market towards greater professionalism.

Moreover, the responsibilities of organisations and individuals participating in the market are more clearly defined – from issuing entities and service providers to regulatory authorities – ensuring transparency and full accountability.

The draft also revises provisions governing service providers, notably prohibiting commercial banks and foreign banks from acting as bond distribution agents, to limit conflicts of interest and reduce risks for investors.

Digital transformation is being accelerated through real-time updates of issuance data and enhanced connectivity with local authorities, thereby improving the efficiency of market management and supervision.

Supervision, inspection, and examinations are being refined with clearer delineation of roles across different levels and sectors, enhancing the detection of violations.

The draft also supplements regulations on dispute resolution and compensation mechanisms, clarifying the responsibilities of issuing entities.

Deputy Minister of Finance Nguyen Duc Chi stated that the new provisions are designed to create maximum convenience for market participants while encouraging clear, safe and sustainable development.

“In drafting the new decree, the drafting committee has inherited the strengths of previous regulations, along with clearly defined orientations and objectives. At the same time, supervisory activities by state management agencies have been adjusted to ensure effectiveness and timeliness, as well as to promptly detect and strictly handle violations,” Deputy Minister Chi said.

Nguyen Quoc Viet, economist at the University of Economics under Vietnam National University, Hanoi, noted that one of the core issues was the need to restructure capital sources, reduce reliance on bank credit, and develop capital market channels such as bonds and equities.

He said that despite various solutions being introduced, the role of professional investors had yet to be fully realised.

Domestic institutional investors also need to be strengthened. However, there remain limitations in policies that would encourage this group to participate more deeply in the market.

“To encourage the participation of institutional investors, it is necessary to continue refining financial policies, including simplifying administrative procedures in a more transparent way. At the same time, building a modern and synchronised financial ecosystem is an urgent requirement,” Viet said.

VIR