The Ministry of Finance consults on the draft Decree amending and supplementing Decree No. 65/2022/ND-CP for easing regulatory bottlenecks
13/12/2022
In order to facilitate the market preparation for the new regulation and ensure companies to manage their sources of financing amid current liquidity strain, Ministry of Finance has drafted a Decree to supplement and amending several articles of Decree No. 65/2022/ND-CP (“Decree No. 65”) dated September 16, 2022 regulating private placement and trading of privately placed corporate bonds in the local market and offering of corporate bonds in the international market as follows:
1. Regarding provisions on determination of professional securities investor status in Decree No. 65, the Ministry of Finance proposes to the Government 02 following options:
(i) Option 1: Extending the implementation period to 01 year for regulations on determining the status of professional securities investors stipulated in Decree No. 65. This provision takes effective from January 1, 2024. The advantage of this option is that the market has more time to prepare and can retain individual professional investors, especially in the context of market liquidity difficulties.
(ii) Option 2: Continuing to implement the provisions of Decree No. 65 on determining the status of professional securities investors. Clause 6, Article 1 of Decree No. 65 stipulates that professional securities investors must ensure that their holding portfolio has an average value of VND 02 billion for at least 180 days with the investor's assets, excluding borrowed funds.
To support the market liquidity, especially for matured corporate bonds due in 2023 - 2024, the first option, delaying the implementation of the provisions of Decree No. 65 on determining the status of professional securities investors for 1 year, is more preferrable.
2. Extending the implementation period to 01 year for provisions requiring compulsory credit rating, from January 1, 2024, this provisions will be implemented. For public offering, the regulation is still following the roadmap in Decree No. 155/2020/ND-CP. In other words, credit rating must be obtained from January 1, 2023.
Reason: Currently, local businesses have difficulties in raising capital for their business activities, while it takes a certain period for them to fulfil the credit rating requirements. Also, this regulation would increase the issuance costs.
3. Extending the implementation period to 01 year for provisions to reduce the period for the distribution of bonds, the provision takes effective from January 1, 2024. Clause 7, 8, Article 1 of Decree No. 65 stipulates that bonds offered in each offering wave must be distributed within 30 days (the previous provision in Decree 153/2020/ND-CP was 90 days).
Reason: In the context that market faces liquidity difficulties, enterprises need to balance and mobilize resources to pay their bonds matured in the period of 2023-2024.
4. Supplementing provisions allowing previously issued bonds with outstanding balance to be extended. The maximum extension period is 2 years. The extension of bonds must be approved by bondholders representing more than 65% of the total outstanding bonds value.
Reason: Allowing this extension, overall, will also help disperse the volume of bonds matured which peaks in 2023-2024 (for bonds maturing in 2023-2024, in case issuer has difficulty in repayment capacity, it can negotiate with investors to extend bond payment to 2025-2026 to pass the peak period).
5. Supplementing provisions that allow issuers to convert bonds into loans or other assets to pay bond principals and interests in accordance with the provisions of civil law and relevant laws.
Reason: consistent with the provisions of civil law or relevant laws.
VBMA has sent the Draft Proposal and Decree for members' opinions and will collect opinions from members to discuss and work with the Ministry of Finance in the coming time.