Solidifying brand reputation of RongViet - a look at successful bond issuances under Decree 65


RongViet Securities has recently announced the Board of Directors' Resolution approving the issuance of RongViet bonds, Series 1 in 2023. This decision comes at a challenging time for the corporate bond market, where stringent regulations on issuance conditions, professional investors, credit ratings, and auditing of capital usage under Decree 65 have been in effect. Despite these challenges, RongViet has managed to successfully execute this bond issuance. This marks the third time the Company has done so in compliance with Decree 65.

The 2022 Business Results 

In 2022, the Vietnam stock market witnessed a significant plunge in market liquidity along with unfavourable developments, which consequently had a substantial impact on RongViet’s business results.

According to the just-released 2022 financial report, RongViet recorded a total operating revenue of VND 860.9 billion, a decrease of 18.3% compared to the same period in 2021. Meanwhile, operating expenses amounted to VND 1,013.8 billion, an increase of 95% compared to 2021, resulting in a consolidated after-tax loss of VND (114.98) billion.

Excluding provisions for proprietary trading activities, RongViet's 2022 business operations reported a consolidated pre-tax profit of VND 95.5 billion.

The 2022 business results were predominantly affected by the negative profit from investment activities. The surge in recorded costs during the period was primarily attributed to provisions made for revaluing the proprietary trading portfolio at the end of the period. However, with an investment portfolio consisting of shares in leading industry enterprises and highly efficient operations such as CTG, ACB, DBC, HSG, etc., RongViet remains optimistic that investment activities will recover and yield more positive results in 2023. 

Asset - Capital Structure

As of December 31, 2022, RongViet's total assets reached VND 4,254 billion, a slight increase compared to VND 4,033 billion at the beginning of the year. In 2022, the Company successfully increased its charter capital, recording shareholders' equity at the end of 2022 of VND 2,082 billion, a 26.5% increase compared to the VND 1,645 billion at the beginning of the year. The margin balance and bond issuance balance were VND 2,018 billion and VND 1,622 billion, respectively, both lower than at the beginning of 2022. 

  • In terms of asset structure: As of December 31, 2022, the Company's total assets reached VND 4,254 billion, primarily allocated to the following activities: (1) Investment activities (including VCB bonds): valued at VND 1,260 billion, accounting for 29.6% of total assets and 60% of the Company's shareholders' equity; (2) Lending to clients: with a value of approximately VND 2,300 billion, representing 54% of total assets and 1.1 times shareholders' equity; (3) Cash: The company consistently maintains a cash balance of approximately VND 500 billion at all times to meet the demand for quick capital payments. 
  • Regarding capital structure: The Company's capital structure consists of equity capital, borrowing limits from reputable credit institutions, and funds raised from bond issuance, allowing the Company to proactively manage its capital sources for business operations. As of December 31, 2022, the Company's total capital reached VND 4,254 billion, with the following breakdown: (1) Equity capital amounted to VND 2,082 billion, accounting for nearly 50% of total capital; (2) Total liabilities amounted to VND 2,171 billion, including bond liabilities of VND 1,622 billion. 

With the current asset - capital structure, RongViet's capital is relatively secure, ensuring proactive management in all scenarios and providing capital for its business operations. Specifically, for proprietary trading activities, RongViet always utilises its own capital. The remaining portion of equity capital (nearly 50% of total equity) and funds raised from financial institutions and bond issuance are allocated to margin lending and advance payments. 

Rong Viet consistently complies with financial safety ratios and risk management standards set by regulatory authorities 

Throughout its operations, RongViet consistently maintains and ensures its financial ratios are at good and stable levels, meeting the requirements for financial safety ratios and risk management as stipulated by the regulatory authorities. 


Source: RongViet's audited financial statements for 2020, 2021, and 2022

The financial situation of the Company was maintained at a healthy level, with a financial safety ratio of 433.6% at the end of 2022, significantly higher than the requirement set by the Ministry of Finance, which is 180%.

Solidifying Rong Viet's reputation through its successful Corporate bond issuances 

With a solid foundation established and continuously reinforced over more than 16 years of operation, along with the trust of clients and investors, RongViet has successfully executed several corporate bond issuances from 2021 to the present. Each issuance has had an average scale of between VND 300 - 500 billion, consisting of debentures with a 1 to 2-year term, monthly interest payments, and market-based interest rates at the time of issuance. 

The Company always ensures full repayment of principal and interest on bonds when due and fully complies with all legal regulations regarding information disclosure, bond offerings to investors, and periodic reporting obligations to regulatory authorities as stipulated. According to the corporate bond information website of the Hanoi Stock Exchange, all of RongViet's bond issuances from 2021 to the present, including bonds that have reached their maturity dates (which have been fully repaid with both principal and interest by the issuer) and outstanding bonds (listed as ‘normal’), are publicly disclosed and regularly updated on the HNX. 

On September 16, 2022, the Government issued Decree No. 65/2022/ND-CP, which amends and supplements several provisions of Decree No. 153/2020/ND-CP. Accordingly, Decree 65 imposes strict regulations on various aspects, including capital usage, issuance conditions, criteria for professional investors, credit ratings for issuing companies, mandatory audit reports on capital usage for outstanding bonds to ensure their intended use, and the responsibilities of advisory firms and auditors, etc. These regulations present “formidable obstacles” to companies seeking to issue corporate bonds to raise capital. 

RongViet is firmly committed to legal compliance throughout its operations and fulfils all requirements for bond issuance under Decree 65. Starting from January 1, 2023, in accordance with the decree, companies are required to obtain credit ratings as a mandatory prerequisite for bond issuance. However, right when the draft amendment to Decree 153 was issued, RongViet proactively took action and selected FiinRatings to conduct credit ratings for the Company. FiinRatings is one of the three entities authorised to issue credit rating reports in Vietnam, with a reputable and professional team of experts, and has provided credit rating services for numerous large enterprises in the country. 

Additionally, RongViet also proactively selected a reputable auditing firm to conduct an audit report on the use of bond funds, ensuring full compliance with the requirements of Decree 65. The auditing firm thoroughly reviewed the intended use of funds from RongViet's issued bonds and confirmed that all the funds from bond issuances were used in accordance with the purposes outlined in the Company’s issuance plan and information disclosure documents for investors. These findings serve as a testament to RongViet's commitment to transparency and strict adherence to the declared purposes of fund utilisation. 

With thorough preparation from the very beginning and immediate compliance upon the official issuance and effective date of Decree 65 on September 16, 2022, RongViet fully met all the conditions for bond issuance as stipulated by Decree 65. In the final two months of 2022, RongViet announced two bond issuances, and it was one of the few organisations that fully complied with all the issuance conditions and standards as specified in Decree 65. With these two bond issuances, RongViet successfully raised nearly VND 350 billion during a challenging time for the corporate bond market. This achievement undoubtedly demonstrates the absolute trust and confidence of clients, investors, and partners in RongViet. 

Recognizing that corporate bond issuance is an effective and crucial channel for capital mobilisation, following the success of two bond issuances under Decree 65 at the end of 2022, on March 1, 2023, RongViet announced the Board of Directors' Resolution approving the plan to issue RongViet bonds in 2023, Series 1. The total issuance amounts to VND 410 billion with a one-year term, and the target bondholders are individual investors or institutional investors meeting the conditions of professional securities investors under Decree 65. The purpose of using the proceeds from this issuance is announced as debt restructuring for the issuer (including repayment of loans and/or maturing bond debt). 

The company completed all issuance documents as required, and announced the issuance date on March 3, 2023, via the corporate bond information system of the Hanoi Stock Exchange. With this issuance, RongViet expects to successfully mobilise capital in line with the announced plan.