State-owned groups and corporations' foreign capital borrowing will be tightened under a new State Bank circular.
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State Bank governor Nguyen Van Binh has just signed off on Circular 19/2011/TT-NHNN guiding foreign currency management for international corporate bonds without government guarantees.
The circular regulates the legal documents and procedures enterprises must carry out when issuing international bonds, without government guarantees. It includes the process to register a foreign loan in the form of overseas bonds issuance to ensure legal regulations and compliance with international common practices.
Particularly, for economic state-owned groups and corporations, international bond issuances limit will be controlled more tightly.
In detail, according to the previous draft circular, foreign capital mobilisation of state-owned enterprises must be approved by the state representatives and the Ministry of Finance (MoF) on borrowing limits under national foreign debt safety limits.
Conditions for state-owned enterprises to borrow foreign capital will be tightly regulated through the requirement that competent authorities control the method of borrowing.
Basing on national debt safety standards, the MoF will set the foreign loan limit each year. Before approved by the prime minister, foreign loans will not be allowed to exceed 50 per cent of the previous year’s limit.