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Official Gazette

Tuesday, December 1, 2020

Draft circular aims at stricter control of corporate bond-related transactions

Updated: 14:02’ - 29/05/2020
Credit institutions and foreign bank branches with a non-performing loan ratio of over 3 percent would be disallowed to buy corporate bonds, according to a draft circular recently released by the State Bank of Vietnam (SBV).

Specifically, a bank with a non-performing loan ratio of over 3 percent may not buy corporate bonds issued by an enterprise whose debts at a bank, maybe the bank itself or another one, are classified as non-performing loans for 12 months prior to the time the purchase decision is approved, regardless of whether it intends to buy such bonds through initial offerings or acquire them from other organizations and individuals.

The SBV also disallows banks to purchase corporate bonds for the purpose of contributing capital to or acquiring shares from enterprises.

Credit institutions that keep the purchased corporate bonds until the date of maturity would be disallowed to redeem corporate bonds already sold to other credit institutions or bonds issued in the same lot or offering with those they have sold, unless such bonds are sold under a restructuring plan approved by competent authorities.

The draft also provides that credit institutions and foreign bank branches would not be allowed to either borrow loans from others to purchase corporate bonds or purchase corporate bonds that are issued by enterprises to restructure the latter’s debts.- (VLLF)

 

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