There is a rising trend of businesses shifting from bank credit to private placement of bonds, with the issuances often worth several times their equity, the ministry said in its proposal.

Of 177 businesses that issued bonds in the first 11 months of last year, 28 made issuances worth over three times their share capital, according to the Hanoi Stock Exchange (HNX). They were worth 100 times the equity for six of them, and 50 times for 11.

Many businesses did not clarify the purpose of the issuance. This lack of information poses a risk to investors, the ministry said.

The ministry has proposed that a bond issuance through private placement should not exceed three times the issuing entity’s equity.

This is also expected to persuade companies to switch to public issuances to increase transparency, it said.

The duration between two issuances must be no less than six months, a proposed regulation which seeks to prevent businesses from raising money from a large number of investors via private placements.

The ministry also wants to keep the coupon rate below 20 percent.

The value of corporate bond issuances increased by 25 percent from 2018 to VND280 trillion ($12 billion) last year, according to top brokerage SSI Securities Corporation (SSI).