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Leaders of many businesses are afraid of “legal risks” in the issuance of bonds

HoREA: Leaders of many businesses are afraid of

Issuing bonds is an important capital channel for real estate businesses. Photo: Quang Duy

Because the enterprise mobilizes capital for the entire project, but the project is implemented according to the schedule, the capital is also spent according to the schedule, so it is difficult to meet the regulations.

Tightening bonds, businesses run out of doors to raise capital

According to Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association (HoREA), the bond market is an important medium and long-term capital mobilization channel for the economy, including the real estate market. to ensure the balanced development of the capital market and the money-credit market.

Not to mention, the development of the bond channel is in line with international practices according to the principle that “Enterprises issue bonds on the principle of self-borrowing, self-paying, self-responsibility for the effective use of capital and ensuring the ability to debt repayment” (specified in Clause 1, Article 5 of Decree No. 163/2018/ND-CP)”.

However, from 2016 until now, the State Bank has implemented a roadmap to gradually limit credit in potentially risky areas, including real estate.

It is expected that by mid-2023, credit institutions can only use no more than 30% of total short-term mobilized capital for medium- and long-term loans.

HoREA recommends the Ministry of Finance to submit to the Government for consideration and amendments to Decree 163/2018 and Decree 81/2020 to correct and ensure healthy corporate bond issuance, ensuring legal rights and interests, legitimate for investors and customers, applied from January 1, 2023.

In particular, it is recommended to supplement strict regulations on credit rating assessment of credit rating agencies for bond issuers.

Supplementing the evaluation criteria for the really competent guaranteed bond issuer consulting unit. Supplementing regulations on bond issuance and specifying the use of corporate bond capital for the right purposes.

Mr. Le Hoang Chau, Chairman of HoREA

“Real estate businesses are increasingly finding it difficult to access credit loans – an important source of initial “prime capital” and “midwife” to implement projects in the period when they are not eligible to raise capital from customers”, Mr. Chau commented.

Therefore, real estate businesses must seek capital from the capital market, including the issuance of corporate bonds to supplement and replace a part of the credit loan shortage.

According to the report of Saigon Securities Joint Stock Company SSG, the total amount of corporate bonds in circulation at the end of 2021 reached about 1.4 million billion VND. The average growth rate is 46%/year in the period 2017 – 2020.

The proportion of corporate bonds has a strong tendency to increase in GDP, from 4.9% in 2020 to 16.6% of GDP in 2021, far exceeding the target of “the outstanding balance of the corporate bond market reaches about 7% of GDP by 2020 and about 20% of GDP by 2030” in Decision No. 1191 dated August 14, 2017 of the Prime Minister approving the roadmap for the development of the bond market.

Notably, in 2021, real estate is the group of businesses that issue the most bonds with VND 318,200 billion, accounting for 44% of the total issuance volume and increasing by 66.3% compared to 2020.

HoREA: Leaders of many businesses are afraid of

When bonds are “squeezed”, businesses will find it difficult to raise capital to develop projects. Photo: Quoc Hai

However, recently, related to the bond issuance case at Tan Hoang Minh, a number of commercial banks have made very “stressful” moves such as temporarily suspending credit granting to real estate businesses. Real estate investors, real estate investors. At the same time, there were also suggestions to immediately tighten the issuance of corporate bonds.

“This move makes it difficult for businesses to get new loans and restructure old loans. Even people with real needs find it difficult to access credit to build or repair houses, This will become a barrier to the development of the real estate market,” said Mr. Chau.

Businesses are insecure after Tan Hoang Minh, FLC

In recent years, a number of real estate businesses have issued individual corporate bonds but have not been assessed for credit according to international practices, issued bonds with very high interest rates but no collateral. guarantees, or security measures are not reliable enough. This can lead to damage to investors, even showing signs of breaking the law, which the Ministry of Public Security has recently prosecuted and detained a number of leaders of Tan Hoang Minh Group, FLC Group. on the act of “fraudulent appropriation of property” and “manipulating the stock market”.

“The association highly welcomes the Prime Minister’s quick dispatches directing drastic solutions to handle violations in securities trading activities and corporate bond issuance, strengthening market confidence. At the same time, it will prevent negative impacts that may destabilize the investment environment, economy and real estate market, and cause damage to corporate assets and investors.

Because, to lose faith is to lose everything. The real estate market is closely related to more than 35 other business and production sectors of the economy. Recently, there has been a phenomenon of bad guys taking advantage of “dropping water in the rain”, spreading fake and false information to lose confidence in the economy, acquiring businesses or making illegal profits”, HoREA Chairman stated.

According to Mr. Chau, currently, there is a mood of insecurity and anxiety among some business leaders because in the midst of a forest of administrative procedures and many overlapping and confusing legal regulations today, businesses are very afraid. entangled in “legal risks”.

Citing this, HoREA Chairman stated that the law requires “using mobilized capital for the right purpose” including bank credit loans, capital mobilized from customers, capital mobilized from the stock market. securities or from the issuance of corporate bonds (Article 34 of Decree 163).

If the authorities, when inspecting, inspecting and investigating, require enterprises to properly use the mobilized capital according to the “pocket” of each project, it is not close to reality. Because the business mobilizes capital for the entire project. The project is implemented according to the schedule, so the capital is also spent according to the schedule.

“The key issue is whether the enterprise implements the project on schedule and hands over the house, pays interest and repays the loan as committed to customers and investors,” the HoREA leader pointed out.

In addition, HoREA leaders also said that in the situation of the economy is still difficult and the business community is still “losing strength and exhausted” after the Covid-19 epidemic, it is urgently needed by the Government and competent agencies. understanding, sharing, especially urgently building and perfecting the legal system, creating a transparent, fair, open and healthy business and investment environment…

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