Illustrative image (Photo: VNA) VCCI said that the draft is well formulated, successfully repairing the cracksthat had appeared in Decree No 153. More importantly, ithelps mitigate the problem of information asymmetry betweenbondholders and issuers.
But the good news goes only so far. The chamber said the draftgives little time for stakeholders to prepare for the big changes that itis going to bring about. With such a short window, they would bestruggling to adapt to the new legal document.
VCCI took credit rating as an example, which would be mandatoryfor bond issuers on January 1, 2023. It said the date is too tight forcredit rating agencies to service a large number of clients thatwould flock to them by the deadline.
"It is not easy to make credit rating compulsory for bondissuers, given that there are just a few credit rating agencies in thecountry," said VCCI.
The chamber also said the proposal to push the date back to January 1,2024, would make no difference to the situation because bond issuers arelikely to leave their application for credit rating to the lastminute.
To prevent the bottleneck, VCCI suggested certain bond issuers be picked outand assessed for creditworthiness in 2023. Once the issuers are assigned creditscores, the authorities then proceed to make credit rating obligatory for allbond issuers in 2024.
VCCI also called on commercial banks to ensure that bondholders are fully awareof the financial risks associated with corporate bonds when theypurchase the bonds via banking channels.
Truong Thanh Duc, director of the law firm ANVI, stressed the importance ofmandatory credit rating for bond issuers and reckoned that the credit ratingmarket would need a couple of years to take hold.
"If credit rating wasn't made mandatory for bond issuers justbecause of few credit rating agencies, then the corporate bondmarket would not make any progress in the next 20 years," said Duc.
A recent report by the Vietnam Bond Market Association shows that total corporatebonds issued via public offerings in the first 11 months of 2022 droppedby 60% compared to the same period last year.
Meanwhile, corporate bonds issued via private placement witnessed a drop of 56%.Remarkably, bond issuers bought back roughly 164 trillion VND worth ofbonds during the period, up 32% year-on-year./.
VNA
