The Draft Decree amending and supplementing Decree No. 65 contains proposed provisions on the payment of bond principal and interest by enterprises with other assets (Supplement point d, clause 3 of Decree No. 65). This proposal has been approved, detailed in Decree No. 08/2023/ND-CP amending and supplementing Clause 3, Article 34 of Decree No. 153/2020/ND-CP.
Article 1 of Decree No. 08/2023/ND-CP stipulates:
“Amending and supplementing Clause 3, Article 34 of Decree No. 153/2020/ND-CP dated December 31, 2020 of the Government stipulating the offering and trading of private placed corporate bonds in the domestic market and offering selling corporate bonds to the international market as follows:
3. Pay in full and on time the bond principal and interest upon term and exercise the attached rights (if any) to the bondholder according to the bond’s terms and conditions. For bonds offered for sale in the domestic market, in case the issuing enterprise is unable to pay in full and on time the bond principal and interest in Vietnam Dong according to the issuance plan announced to investors in accordance with the provisions of Article 17 of this Decree, enterprises may negotiate with bondholders to pay bond principals and interests due by other assets on the following principles:
a) Comply with the provisions of civil law and relevant laws. For conditional business lines and investment lines, they must also comply with the provisions of law on such conditional investment and business lines.
b) Must be approved by the bond holder.
c) The issuer must disclose unusual information and take full responsibility for the legal status of the assets used to pay bond principal and interest in accordance with the law.”
Accordingly, bond issuers will be able to negotiate with bond investors on the payment of bond principal and interest due with other assets for bonds offered for sale in the domestic market in case the issuer is unable to pay in full and on time the bond principal and interest in Vietnam Dong according to the issuance plan announced to investors.
With this regulation, bond issuers are having difficulty in liquidity but have other types of assets such as real estate assets (often called ‘leftover inventory’) but cannot or are experiencing difficulty trying to sell such assets to the market. From now on, they can choose to negotiate with investors to pay the agreed interests and principals with real estate assets or other assets.
Regarding the real estate segment, it can be existing, completed or unfinished real estate products, assets which are currently on paper, construction bonds that can be converted into products when project is completed,…
However, it should be noted that this provision requires the consent of the bondholder, i.e. the investor who purchased the corporate bond. Bond issuers cannot force bondholders to accept payments of interest and principal due with other assets such as real estate, which are different from what was originally agreed in the corporate bond purchase and sale contract.