HCMC – The National Assembly (NA) is considering issuing stricter rules on private bond placement to enhance transparency, reported the local media.
Under proposed amendments to the Enterprise Law at an NA session on June 9, companies would be allowed to issue bonds via private placement only if their total liabilities do not exceed five times their equity, based on the latest financial statements. The rule would not apply to state-owned enterprises, real estate developers, banks, insurers, insurance brokers, securities companies, or fund managers.
Lawmakers are weighing two options. One would authorize the Government to set the debt-to-equity ratio depending on economic conditions and industry specifics. The other would fix the ratio at five times, to be specified in the law.
Phan Van Mai, chairman of the NA Economic and Financial Committee, said stricter bond issuance conditions are needed to improve bond quality, strengthen transparency, and control risks. He noted that recent bond payment issues mainly involved real estate firms, which are excluded from the regulation.
NA Chairman Tran Thanh Man said past violations, including widespread bond issuance and weak state oversight, had led to defaults and investor complaints, forcing the Government to intervene. He supported setting financial conditions as a preventive measure but questioned whether the ratio should be regulated by law or by Government decree for more flexibility.
Finance Minister Nguyen Van Thang said many countries limit corporate debt to between three and five times equity for private bond issuers. He added that the proposed ratio would not significantly affect firms’ ability to raise capital for business operations.
The Finance Ministry recommended stipulating the ratio in law to enable immediate enforcement. The NA is expected to vote on the draft amendment on June 17.
