State Bank of Việt Nam has tightened regulations on corporate bond purchase by credit institutions and foreign banks’ branches.

Under Circular No. 15/2018/TT-NHNN issued on 18th June, which revises Circular No. 22/2016/TT-NHNN dated June 30, 2016, the central bank prohibits them from buying bonds for the purpose of restructuring the issuers’ existing loans, effective from August 2 this year.
The central bank also stipulates that for corporate bond purchase, credit institutions and foreign banks’ branches must have an internal credit rating system besides the system to rate the bond issuers.
They are also required to issue internal regulations on the purchase of corporate bonds in accordance with the current legal regulations. Accordingly, internal supervision regulations on corporate bond purchase, especially bonds issued for the purpose of implementing programmes and projects in areas of potential risk as identified by the assessment of credit institutions and foreign banks’ branches, must be established to detect risks and violations to ensure the recovery of principal and interest of corporate bonds.
Credit institutions and foreign banks’ branches must also issue internal regulations on specifying the areas of potential risks as well as their credit and investment policies on the areas./.
Source: VNS