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Corporate bond issuance drops sharply after arrest of Tan Hoang Minh chair

After the cancelation of nine corporate bond issuances of three companies related to Tan Hoang Minh, the volume of private offerings fell sharply by 33 percent to VND30 trillion in April.

The Ministry of Finance (MOF) on May 19 said after the move by state management agencies to tighten control over corporate bond issuance and services and investments in bonds, the bond market in the first months of 2022 witnessed important changes.

The amount of bonds issued decreased, while regulations on information exposure and the checking of issuance conditions were more strictly observed.

In the first quarter of 2022, the volume of privately offered corporate bonds was VND138.809 trillion. The bonds were mostly issued in January, before Circular 16/2021 dated November 10, 2021 on bond purchases and sale by credit institutions and foreign bank branches took effect. The amount gradually decreased in February and March.

Meanwhile, in April, following information about the cancellation of bond issuance of three companies related to Tan Hoang Minh, the volume of bonds issued dropped sharply by 33 percent compared with the same period last year.

Real estate and construction firms were the two biggest issuers in the first quarter of 2022, which accounted for 50.98 percent and 18.87 percent, respectively, of total bonds issued. The figures were 4.85 percent for commercial banks, 6.8 percent for trade and service companies, and 9.2 percent for production enterprises. 

In April, bonds were mostly issued by credit institutions, which accounted for 63.4 percent. The bonds issued by real estate firms accounted for 11.6 percent.

The buyback of bonds before maturity continued to be carried out in large quantities. In the first three months of 2022, the pre-maturity repurchase was valued at VND12.8 trillion.

As of the end of April 2022, the total pre-maturity buyback volume had reached VND24.7 trillion, an increase of 17.9 percent over the same period last year.

The volume of bonds bought back in April was VND11.9 trillion, equivalent to the buyback volume in the first quarter.

Meanwhile, some bond issuers took the initiative in disclosing information, or correcting information released before about the purposes and methods of using capital.

After the release of MOF’s Directive 01/CT-BTC, bond issuers and consultancy firms checked the conditions and the issuance documents before launching new offerings. 

The volume of shares issued in the first two weeks of May continued to decrease to VND5.2 trillion, just equal to one-third of that of the same period last year.

MOF said it is going to propose amendment of some articles of the Securities Law and Enterprise Law. It is also considering a policy on compulsory credit rating for bond issuers.

Luong Bang

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