Under Decree No 53/2009/ND-CP, bonds can be issued overseas only to raise capital for key national projects with demonstrable effectiveness and the capacity to repay borrowed funds.

But the decree also recognises the right of Vietnamese enterprises, as well the Government, to directly issue bonds on the international market on the principles of freedom of contract and corporate responsibility for the effective use of borrowed capital.

Nevertheless, corporate bond issues must meet certain legal requirements under the decree, including approval by the enterprise’s management board and by the Government prior to being offered on overseas markets. The bonds should also meet with credit rating standards, if any, set by the foreign market.

The total value of bonds issued overseas must also fall within the overall annual cap on commercial loans from overseas lenders, as ratified by the Prime Minister.

If guaranteed by the Government, a corporate bond issue on a foreign market must be worth at least US$100 million.

The decree also stipulates that a Government bond issue on a foreign market must total at least US$500 million, with the Ministry of Finance responsible for any plans to issue bonds overseas.

Recognising that some Government bonds are issued to raise funds for enterprises to borrow, the decree also stipulates that enterprises seeking to borrow from the proceeds of bonds must apply to the Ministry of Finance and supply full documentation about the project, including repayment plans.

The new decree will take effect on July 30.