Two sides of corporate bonds

Fall pain, long memory

When summarizing the stock market at the end of 2021, Mr. Nguyen Le Minh, Deputy General Director of Dragon Capital warned that, with the enthusiasm of investors in the bond market over the past time, it will be difficult to give a warning. which makes them afraid, but investors themselves have to go through traumatic experiences to wake up.

One of the above experts’ concerns when discussing the corporate bond market is that its negative angle has now been exposed when the State Securities Commission has just issued a decision to cancel 9 issuances of high value. more than 10,030 billion VND of Tan Hoang Minh Hotel Service Trading Company Limited (Tan Hoang Minh).

According to the investigative agency, Tan Hoang Minh mobilized money from investors but did not use it for business activities as stated in the bond issuance dossier. So now, how will this corporation (if possible) refund investors?

In a statement sent to customers on April 5, 2022, Tan Hoang Minh said that the issuance, valuation and asset management consulting, ensuring in accordance with the order and regulations of the law, was carried out by the reputable securities companies, banks. Tan Hoang Minh commits that the information about bonds has advised customers in accordance with what the bond issuer is.

If the bond issuance has to be canceled at the request of the management agency, Tan Hoang Minh will work with the issuer, the regulator and related parties to refund the entire amount raised. customer verb.

Lawyer Truong Thanh Duc, Director of ANVI Law Firm, analyzed that according to the provisions of Article 28 of the Securities Law, Tan Hoang Minh would have to withdraw the issued bonds and return money to investors within a period of time. 15 days from the date the offering is cancelled. Past the time limit, the enterprise must compensate the investor for damage according to the committed terms. If Tan Hoang Minh cannot immediately buy back all 9 canceled bond lots because money has been pushed into the project, it will be very difficult to handle, the parties are likely to have to go to court to settle.

It is worth mentioning that with today’s developed technology, social networking and e-marketing tools have been thoroughly used in inviting customers to invest in Tan Hoang Minh bonds, including many advertising on facebook. Besides, as reflected by investors, they were advised to buy Tan Hoang Minh bonds by staff of some banks and securities companies, emphasizing the high interest rate factor.

Employees of the bond trading department of a securities company shared that they were invited to participate in the sale of Tan Hoang Minh bonds with a commission of 2-2.5% of the contract value.

Looking at the 12%/year interest rate paid by businesses in the Tan Hoang Minh group, experienced investors will realize the risk. If you include the commission paid to the bond sales staff, the operating cost of the business is about 2.5%, then the bond has to bear the cost of approximately 17%/year, the interest rate is difficult for any business to do business. good enough to break even, let alone make a profit, according to the analysis of investors knowledgeable about this investment channel.

The magic of interest rates and the art of offering as well as many other factors make not only retail investors, but also housewives willing to put money into corporate bonds. Records of Securities Investment show that some individual investors who spent tens of billions of dong to buy Tan Hoang Minh bonds are worried about the situation that capital cannot be recovered.

One problem that investors have long felt secure when putting capital in bonds is the appearance of securities companies and banks, which are considered as a guarantee of safety.

However, through the case of Tan Hoang Minh, this is also a matter of note, because the scope and responsibilities that these financial institutions participate in will follow professional skills that are difficult for ordinary investors to have. can understand. Such names appearing in bond offerings do not mean that they guarantee the interests of investors.

For example, regarding the bond lots of enterprises belonging to Tan Hoang Minh, Bao Viet Securities Company (BVSC) said, the Company has consulted the offering documents on the basis of information and financial statements. data provided by Viet Star Company. This is the first bond issuance in 2021 of Viet Star, the issuer and is responsible for the information disclosed in the offering file. The result of the initial offering (first time) of the entire issued bond volume equivalent to 800 billion VND to an institutional investor is Tan Hoang Minh.

Similarly, An Binh Securities Company (ABS) advised Soleil to issue bond code SOLCH2123001, with a total value of VND 800 billion, which is a bond with collateral and payment guarantee. Tan Hoang Minh continues to be the only investor to buy all the bonds of this issuance.

Both BVSC and ABS confirm, they do not advise or distribute offering documents or participate in any stage for the secondary sale of the above bonds from Tan Hoang Minh, or any bonds related to Tan Hoang Minh. Hoang Minh or related companies for other investors.

So that “the worm does not upset the soup pot”

FinnGroup’s data shows that the corporate bond market currently accounts for 17% of GDP and thrived during the two years of the Covid-19 pandemic, becoming an effective capital mobilization channel for many businesses.

During its hot development process, the market has revealed many “grits” that both regulators and many intermediary financial institutions have voiced. When small-scale wrongdoing is not dealt with early and seriously, it becomes worse and more widespread precedents.

Handling cases like Tan Hoang Minh needs to be calculated on “many sides” so that the financial system is not affected and erases the fear of the bond channel, leading to overreactions…

However, the positivity and development practices of the market cannot be denied. According to Mr. Tran Tuan Anh, Investment Banking Division Director of Mirae Asset Vietnam Securities Company, in 2021, many professional financial institutions have contributed capital to participate in corporate bond issuances, helping the bond Shares have become an important capital mobilization channel for businesses, besides bank credit and capital mobilization through stock issuance.

Mr. Tuan Anh said that the bond market needs to be adjusted, especially the private issuance channel, when this issuance channel is tighter, it will encourage businesses to issue to the public, with transparent standards and meeting strictly regulated conditions, being approved and licensed to issue, through many appraisal departments, bonds are listed on the centralized market with many investors buying and selling.

However, due to the sensitive nature and much larger scale of the bond market, the directors of many securities companies said that the handling of cases like Tan Hoang Minh should be calculated on “many sides”. leaving the financial system unaffected and removing fear of the bond channel, leading to overreactions by prematurely closing the contract, accepting penalty for breach of contract among individual investors. causes great consequences for businesses when cash flow is interrupted suddenly.

According to the Pope