Authorities join corporate bond oversight under new framework

Authorities join corporate bond oversight under new framework

Under the Government's Decree No. 200 on corporate bonds, provincial and municipal People's Committees are now specifically assigned responsibilities for managing and supervising bond issuers operating within their jurisdictions.

Corporate bond issuance reached nearly $10.5 billion in the first half of the year. — VNA/VNS Photo

The corporate bond market is entering a tighter supervisory regime as provincial authorities take on a formal monitoring role for the first time, while issuers face new limits on financial leverage and stronger transparency requirements as issuance activity accelerates.

Under the Government's Decree No 200 on corporate bonds, provincial and municipal People's Committees are now specifically assigned responsibilities for managing and supervising bond issuers operating within their jurisdictions.

The local authorities will periodically report to the Ministry of Finance on corporate bond issuance, inspections, examinations and enforcement actions involving enterprises under their supervision.

Hoàng Văn Thu, Vice Chairman of the State Securities Commission (SSC), told tienphong.vn that the new framework strengthens decentralisation by giving provincial authorities greater responsibilities for supervision, inspection and handling violations.

Their proximity to businesses could help regulators identify unusual signs at an earlier stage and coordinate with central authorities when intervention is required, he said.

The arrangement establishes several layers of oversight, covering information disclosure, post-issuance supervision, inspections and enforcement. 

Reports from local governments will also provide the Ministry of Finance with additional data to assess market developments.

Thu said the decentralisation would not create overlapping supervision because Decree No 200 defines relatively clear responsibilities for each authority and level of government.

Trương Hiền Phương, senior director at KIS Vietnam Securities, said new provisions in the draft circular guiding Decree No 200 further clarify the responsibilities of different participants in the corporate bond market, ranging from issuers and intermediaries to regulators.

According to Phương, clearer responsibilities are important for improving the transparency and professionalism of the market. 

He also said the participation of provincial authorities in monitoring issuance and handling violations would strengthen supervisory effectiveness and coordination between local and central regulators.

The framework means issuers will not only have to satisfy regulatory requirements when bonds are issued but also maintain transparency and fulfil their obligations throughout the life cycle of the debt.

Decree No 200 also introduces a cap on the debt-to-equity ratio at five times. According to the SSC leadership, the requirement is intended to help issuers better control financial risks.

Under the principles governing the private placement market, companies remain responsible for their borrowings and debt repayment obligations, while investors are expected to conduct their own due diligence, assess issuers and manage investment risks.

The stronger supervision comes as Việt Nam's corporate bond market shows signs of renewed momentum.

According to data from MBS Securities, corporate bond issuance reached nearly VNĐ273.5 trillion (US$10.5 billion) in the first half of the year, up 1.8 per cent year-on-year.

Real estate companies accounted for around VNĐ123.4 trillion, or 45 per cent of total issuance, while banks issued about VNĐ120.8 trillion, representing 44.2 per cent.

However, repayment pressures remain.

MBS estimates that approximately VNĐ30.9 trillion worth of corporate bonds will mature in the third quarter, down 47 per cent from the same period last year. Real estate bonds account for around 61 per cent of the amount, equivalent to VNĐ18.9 trillion.

By the end of June, the value of bonds facing delayed payment obligations was estimated at nearly VNĐ38.3 trillion, equivalent to about 2.8 per cent of outstanding corporate bond debt.

Đoàn Duy Tú, head of Investment Advisory at VPBank Securities (VPBankS), said businesses continue to have substantial medium- and long-term funding requirements while traditional financing channels, particularly bank lending, are under pressure. 

Banks are currently using around 40 per cent of short-term funding for medium- and long-term lending, he noted.

Tú said recent policy changes have shifted the emphasis from administrative tightening towards improving the transparency of bond offerings. 

Greater transparency could also make it easier for future issuances to be assessed by credit rating agencies, potentially improving companies' access to longer-term financing. 

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