In the past, the bond market in general and corporate bonds in particular were the private playgrounds of companies, financial corporations, banks and investment funds, etc. Thus, only these organizations have enough capital, financial knowledge and risk management mechanism to join these trillion playgrounds.
However, currently, the market witnesses the forms of banks and securities companies distributing bond products to investors to buy various corporate bonds as a form of high-interest money savings. Accordingly, many small and retail individual securities investors derive benefits from the loopholes of regulations to easily meet the conditions for being determined as a professional securities investors to buy private bonds with high interest rates. In addition, there are also cases of investors under the support of securities companies and banks who mutually contribute capital through them to buy bonds.
Under the adoption of Decree 65/2022/ND-CP (“Decree 65”), along with giving a series of stricter regulations on determining professional investors eligible for buying private corporate bonds, it is no longer be easy for small and retail investors to participate in this market.
In accordance with the law and the market, there are 2 types of corporate bonds regarding the form and the issuer: 1. Public bonds; and 2. Private bonds. The restrictions related to the offerees (bond buyers) and the high requirements on the bond trading value under Decree 65 are only applied to corporate private bonds. Public or listed bonds are not subject to these regulations and requirements.
Therefore, investors who own listed corporate bonds will still be able to hold and trade them as previously agreed with the issuer, bank or securities company.
However, in the case of private corporate bonds issued under Decree 153/2020/ND-CP, in principle, investors holding bonds shall be required to re-determine whether they still meet the conditions for being a professional investor under the new regulations in Decree 65. Currently, Decree 65 only stipulates that investors must determine their professional securities investor status when buying bonds but is silent on the case where the investor is not satisfied but has bought bonds previously. Therefore, in this account, unless otherwise provided by law, investors shall continue to hold bonds until the end of their maturity date or until the investors resell them to the issuer or other professional investors.
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