VIETNAM’S Finance Ministry on Tuesday (October 29) outlined tougher regulations for the country’s corporate debt market, with proposals aimed at restoring investor confidence eroded by several high-profile frauds involving bond sales. businesses.

Under these plans, issuing companies would have to meet new requirements, including having their debt rated and disclosing their debt ratio.

Additionally, retail investors would face more restrictions. For example, they could only trade debt securities backed by collateral. Institutional investors would not be affected.

The proposed reforms, which must be approved by Vietnam’s parliament, are part of a broader overhaul of the loosely regulated market aimed at boosting investment in corporate debt, which was a major source of financing for the country’s weak real estate sector.

Vietnam’s bond market came to a virtual halt at the end of 2022 following the arrest of real estate tycoon Truong My Lan, who was sentenced earlier this month to life in prison for embezzling around 30 trillion dong ( 1.6 billion Singapore dollars) from investors through the issuance of bonds.

It has partly recovered since then, and new issuance in the first nine months of the year reached 334 trillion dong, matching the 2023 total, with no new defaults reported in September, it said. Vis Ratings, a subsidiary of Moody’s.

Previous government efforts at similar reforms have been poorly received by the market, delaying regulatory progress.

If passed by the country’s parliament, the changes to the securities law will take effect in 2026. REUTERS