New corporate bond decree makes real estate stocks rally

Stocks of real estate companies made impressions on Monday morning with many hitting their ceiling prices as a new government decree on corporate bond private placements has come into force.

Among those experiencing the maximum increase were NVL of Novaland, PDR of Phat Dat Real Estate, DXG of Dat Xanh Group, HQC of Hoang Quan Corp., HPX of Hai Phat Invest, CRE of Century Land, and SCR of Saigon Thuong Tin Real Estate.

The benchmark VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), closed the morning session at 1,039.33 points, a rise of 14.56 points, or 1.42%.

The major bourse saw up to 292 gainers and only 67 losers, with more than 219.1 million shares changing hands for over VND3.43 trillion ($144.7 million), an increase of 25.14% from the March 3 morning.

Not only real estate, green also covered other groups like securities, banking, steel, retail, electricity equipment, construction, and information technology.

Decree 08, effective from Sunday, March 5, specifies many new points about responsibilities of bond issuers. It allows extending the term of bonds by up to two years, while issuers cannot do so at all under the old Decree 65.

In case bondholders do not agree to such a change, issuers "must negotiate with the bondholders to ensure the latter's interests". If negotiations do not reach expected results, issuers must fulfill their obligations to bondholders according to their previously announced bond issuance plan.

For bonds offered domestically, if issuers cannot fully and timely pay principal and interest in Vietnamese dong according to the previously announced plan, they can negotiate with bondholders to pay with other assets.

The newly-issued decree also suspends the Decree 65 regulation on defining individuals' status as "professional securities investors".

According to the old rule, in order to buy private placement corporate bonds, individual investors need to hold a securities portfolio, excluding margin loan value, worth at least VND2 billion ($84,300) in 180 days.

The old rule that required bond distribution time to not exceed 30 days since the announcement of the offering is no longer in effect, until December 31, 2023. This allows issuers to have more time to find investors, increasing the likelihood of success for the offering.