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Tighter controls put on overseas bonds
A new Government decree issued last week puts stricer requirements on the issuance of State and corporate bonds on international capital markets.
Under Decree No 53/2009/ND-CP, bonds can be issued overseas only to raise capital for key national projects with demonstrable effectiveness and capacity to repay borrowed funds.
But the decree also recognises the right of Vietnamese enterprises, in addition to the Government, to directly issue bonds on the international market on the principles of freedom of contract and corporate responsibility for the effective use of borrowed capital.
Nevertheless, corporate bond issues must meet certain lawful requirements under the decree, including approval by the enterprise’s board of management and by the Government prior to being offered on a foreign capital market. The bonds should also meet the credit rating standards, if any, set by the foreign market.
The total value of the overseas bond issue must also fall within the overall annual cap on commercial loans from overseas lenders, as ratified by the Prime Minister.
If guaranteed by the Government, a corporate bond issue on a foreign market must total at least US$100 million.
The decree also stipulates that a Government bond issue on a foreign market must total at least $500 million, with the Ministry of Finance responsible for any plans to issue bonds overseas.
Recognising that some Government bonds are issued to raise funds for enterprises to borrow, the decree also provides that enterprises seeking to borrow from bond proceeds must apply to the Ministry of Finance and supply full documentation about the project, including repayment plans.
The new decree takes effect on July 30.
vietnamnews
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