Corporate bond market cools in September after policy changes

ABO/VNS - Private corporate bonds raised in September dived from the previous month after a decree took effect to tighten the issuance on the corporate bond market.
Data from the Hanoi Stock Exchange (HNX) showed the total value of corporate bonds sold in September was 16.25 trillion VND (nearly 700 million USD), news site ndh.vn reported.
September’s value nosedived 80 percent from August's record of 83.8 trillion VND and was still modest compared to the March-July period.
Between March and July, local companies issued an average of 30.3 trillion VND worth of bonds, ndh.vn reported.
In September, banks’ issuance accounted for 80 percent of the total sold value, which was 13.17 trillion VND.
The Vietnam International Joint Stock Commercial Bank (VIB) topped the market as it sold 3.5 trillionVND worth of bonds in September.

A VIB office. The bank topped the corporate bond market in September as the biggest issuer. (Photo vib.com.vn).

Orient Joint Stock Commercial Bank (OCB), the Vietnam Bank for Agriculture and Rural Development (Agribank), and Sai Gon-Hanoi Joint Stock Commercial Bank (SHB) issued 2 trillion VND each.
Among non-banking companies, SAM Holdings was the biggest bond issuer, raising total 300 billion VND worth of bonds.
The bonds were due in 24 months at an 11 percent annual interest rate. Bonds were backed by 24 million shares of Binh Duong Production and Trading Goods Corporation (UPCoM: PRT) and 20 million shares of Phu Tho Tourist Service JSC (UPCoM: DSP).
On September 1, Decree 81/2020/NĐ-CP took effect to restrict risky purchases of corporate bonds to make the bond market stronger and more sustainable.
Banks face tighter rules
The State Bank of Vietnam (SBV) published a draft circular regulating financial-banking firms’ buying of corporate bonds to make sure banks control bad debts and credit risks.
Under the draft circular, a financial-banking institution can only purchase corporate bonds if its bad-debt ratio is below 3 percent of the total assets, recorded in the previous year’s audited financial report.
The institution is forbidden from buying bonds from the issuer that logs bad debts in other banks and financial firms in the last 12 months prior to the purchase date.
In addition, the institution is not allowed to buy bonds to help the issuer restructure its debts or raise ownership in the issuer or any third-party company.
The SBV is waiting to collect feedback on the draft circular.

(Source: VNS)