HCMC – The State Bank of Vietnam (SBV), the nation’s central bank, is taking steps to tighten control on commercial banks’ acquisitions of corporate bonds.

The move comes after HCMC government officials asked the central bank to strengthen the monitoring of corporate bond purchases by commercial banks. According to the central bank, commercial banks could buy corporate bonds only if they have a credit rating department and the issuer’s ratio of bad debt to outstanding loans was below 3%. Commercial banks are banned from buying corporate bonds that are issued to restructure businesses' debts, raise working capital, or raise stakes in other companies. The SBV also bars commercial banks from selling on corporate bonds to their subsidiaries and buying back bonds of unlisted companies that they sold within 12 months. Additionally, the central bank said that it would work with authorities to ensure the sustainable development of the corporate bond market and make it a medium and long-term fund-raising vehicle in the economy.