The Circular No. 22/2016/T-NHNN dated June 30, 2016 of the State Bank of Vietnam on the purchase of corporate bonds by credit institutions and branches of foreign banks with many important contents.
Accordingly, the eligible credit institution must have a system of internal credit rating, including the credit rating of corporate bond issuers and issue an internal regulation on purchase of corporate bonds in accordance with this Circular and relevant law provisions, at least including process and procedures for assessment and decision on the purchase of corporate bonds; rules, assessment criteria of risk levels of buying corporate bonds pertaining to types of enterprises and corporate bonds; policies and limit for credit management, risk measurement and management system, conditions, measures and processes of risk settlement; internal control of the purchase of corporate bonds.
The Circular also prescribes that credit institutions, foreign bank’s branches shall monitor or through an agent of bond issuance to monitor the use of proceeds from the issuance of bonds by the enterprise; in the event where the corporate bond issuer is found out not to use the proceeds from the issuance of bonds for the proper purposes as stated in the plan on issuance of bonds and commitment with the investors, then the credit institutions shall require the enterprise to re-buy the bonds before maturity. Request the corporate bond issuer to make payment for the bonds upon maturity; in the event where the corporate bond issuer is unable to make payments for the bonds at maturity, the credit institution and foreign bank’s branch shall dispose the secured asset for the bonds secured by assets, and ask the underwriter to perform the obligation of payment for the bonds that are underwritten for payment, and to prosecute the enterprise or the underwriter who breaks the commitments on bond payment..
This Circular takes effect on August 15, 2016 and replaces Circular No. 28/2011/TT-NHNN dated September 01, 2011.
