6 April 2023

On 5 March 2023, the Vietnam Government issued Decree No. 08/2023/ND-CP (“Decree 08”) which amends and supplements Decree 65/2022/ND-CP (“Decree 65”) and Decree 153/2020/ND-CP (“Decree 153”) on corporate bonds. Decree 08 came into force on its issuance.

Decree 08 aims to address the short-term need to restructure principal and interest payments of corporate bonds by providing options for issuers to repay outstanding payments arising from the bonds with assets other than cash and change the bond terms and conditions. Decree 08 also purports to increase demand for bonds by delaying the application of certain requirements under Decree 65, its predecessor.

Some key highlights of Decree 08 are set out below.

1. Repayment of bonds with assets other than cash

For corporate bonds offered in the domestic market, where the issuer is unable to make full and timely payment of the bond principal and/or interest in accordance with the original issuance plan, the issuer may negotiate with the bondholders to pay such principal and/or interests with assets (other than cash) on maturity.

Such alternative repayment method shall be subject to the following conditions:

  • Consent of the relevant bondholders
  • The issuer making extraordinary information disclosure and assuming full responsibility for the legal status of the assets used for repayment of the bond principal and/or interests in accordance with Vietnam law
  • Payment must be in accordance with Vietnam law.

2. Change of terms and conditions of bonds

Subject to obtaining approval from the issuer’s corporate body and bondholders representing at least 65% of the total outstanding bonds, the issuer may change the terms and conditions of the bonds, including the maturity date (provided that the date may only be extended by up to two years from the date provided in the initial issuance plan).

Where these conditions have been met but some bondholders or investors do not agree with the change in the bonds’ terms and conditions, the issuer shall be responsible to negotiate with such minority bondholders or investors to ensure their rights, interests and benefits remain protected as documented in the issuance plan provided to them.

3. Suspension of certain requirements

The requirements set out below have been suspended until 1 January 2024, with the intention to increase demand for bonds. 

Eligible individual professional investors

Decree 153 stipulated that those eligible to invest in or purchase bonds include professional investors as defined under the Law on Securities.

Decree 65 provided that professional investors are eligible to invest in or purchase privately issued bonds if s/he holds a portfolio of securities with a value of at least VND 2 billion for a minimum period of 180 consecutive days preceding the date on which s/he is identified as a professional investor. The certification of such professional investor status is only valid for three months from the date of certification.

This requirement for the individual to have such a portfolio under Decree 65 is suspended until 1 January 2024.

Credit rating of issuers

Decree 65 stipulated that a bond issuance plan shall include a report on the credit rating of the issuer subject to a compulsory rating.

This requirement under Decree 65 is suspended until 1 January 2024.

Time limits for distribution of bonds

Decree 65 stipulated that bonds offered in each offering wave must be distributed within 30 days from the date of public disclosure of the issuance. The total timeline for a multiple tranche offering shall not exceed six months from the issuance date of the first offering tranche. The issuer shall complete the distribution of bonds within 30 days of the date of public disclosure of the issuance.

This requirement under Decree 65 is suspended until 1 January 2024.