Rules on private placement bond issuance should be tightened: Vietnam Finance Minister

By Minh Hue
Mon, June 9, 2025 | 6:19 pm GMT+7

Allowing only companies that have liabilities five times higher than their equity at maximum to issue bonds via private placement is a necessary move to mitigate risks and prevent abuse, said Finance Minister Nguyen Van Thang.

Finance Minister Nguyen Van Thang. Photo courtesy of the legislature's press center.

Finance Minister Nguyen Van Thang. Photo courtesy of the legislature's press center.

At a meeting of the National Assembly's Standing Committee on the draft law amending and supplementing several provisions of the Law on Enterprises on Monday, Thang explained that such a requirement aims to enhance the financial health of bond issuers and reduce the risk of bond default.

The proposed limit should not significantly affect companies’ ability to raise capital for production, business operations, or economic growth, the Minister noted, adding that it will not apply to state-owned enterprises or issuers that are real estate project developers, banks, insurance firms, insurance brokers, securities companies, or fund management firms.

“The goal is to eliminate dishonest businesses and prevent profiteering. Transparent companies can still raise medium- and long-term capital through the bond market,” said Thang.

The Minister also noted that many countries impose similar conditions, capping corporate debt-to-equity ratios at 3 to 5 times for unlisted firms issuing private placement bonds. For Vietnam, such conditions remain necessary given the current lack of full digital transparency across all operations.

Tran Thanh Man, Chairman of the National Assembly - the country's top legislative body, earlier voiced support for stricter conditions on private placement bond issuance by unlisted firms, citing the high risks of this financial product.

He pointed out that numerous legal violations in past issuances led to bondholders not being repaid in full or on time, prompting government intervention.

However, Pham Van Mai, Chairman of the legislature’s Financial and Economic Committee, suggested further review, arguing that most bond repayment problems involved real estate firms, which are excluded from this draft regulation.

He expressed concern that a fixed 5x debt-to-equity limit might lack flexibility in practice, and proposed either detailing the condition within the law or assigning the government to issue detailed guidance, depending on market conditions.

On this point, Minister Thang recommended that the requirement be enshrined in the law itself rather than left to subordinate decrees, to ensure immediate enforceability.

The legislature is expected to vote on the bill on June 17.

Vietnam's private placement bond market was largely subdued throughout 2023 due to regulatory tightening. However, the market rebounded last year with VND444 trillion ($17.05 billion) worth of bonds issued, a 27% increase year-on-year.

In the first five months of this year, real estate companies reported VND31.8 trillion ($1.22 billion) in overdue bonds, accounting for nearly 60% of the market, according to Viet Dragon Securities (VDSC), highlighting continued repayment pressures.

More than VND200 trillion ($7.7 billion) in privately-placed corporate bonds will mature in the final three quarters of this year, with the real estate sector accounting for half, according to independent credit rating provider S&I Ratings.

Specifically, bonds worth VND33.6 trillion ($1.29 billion) are set to come due in Q2, VND91.2 trillion ($3.51 billion) in Q3, and VND77.6 trillion ($2.99 billion) in Q4.

Of the total, VND26.5 trillion ($1.02 billion) had previously been granted maturity extensions.

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