Buy list of investors to play bonds: Easy empty-handed!

Corporate bonds are not bank deposits but are issued by enterprises, so investors may be exposed to risks when businesses fail to meet their principal and interest repayment obligations.
The Ministry of Finance affirmed that according to current regulations, if you are not a professional investor, you are not allowed to buy corporate bonds (Corporate bonds) individually. If using methods not in accordance with the law to become a professional securities investor , both the investor and the organization providing the confirmation service will be severely dealt with.

There are many groups calling for securities investment on social networks with high interest rates. Photo: TL

Breaking the law to buy a professional investor's name

According to a survey by Ho Chi Minh City Law Firm, many individual investors are looking for ways to become professional investors to buy corporate bonds individually or contribute capital through investment cooperation contracts with investors. Professional securities investment. Worryingly, in order to invite individual investors to buy individual bonds, there are many ways to circumvent the law on the market.

Ms. Bao Tram (house in District 2, Ho Chi Minh City) shared that she has 450 million dong of idle money. If you deposit this amount in a bank for a term of less than three months, the interest rate is only about 4%/year. Meanwhile, if investing in corporate bonds, the minimum interest rate is also more than double, ie about 3 million VND. Therefore, she went to a number of groups on social networks to express her desire to find a channel to invest in corporate bonds.

“Knowing that I have a need to invest in corporate bonds, but I am not a professional investor, so some people claiming to be employees of securities companies, real estate, banks invited me to invest. They confirmed that there are many ways for me to become a professional investor with very simple procedures and only need me to spend about 2.5 million dong. They also guided me to buy corporate bonds through an authorization contract," said Ms. Tram.

In fact, recently on social networks, there have been many brokers offering individuals to buy corporate bonds with authorization contracts or pay for professional investor certificates. Many accounts advertise honey such as: Investors will enjoy high interest rates of 10%-12%, commit to paying high interest monthly, interest rates are much more attractive than saving money at banks. ...

T, the owner of an account claiming to be a bond broker, advertises: “The securities company where I work has bought back a lot of bonds issued by a reputable real estate investor. We now divide this bond lot into small lots with flexible maturities of three, six, nine and 12 months for customers to choose from.

The same lot of bonds, but the bank only offers an interest rate of 9%/year, while if investing in this lot of bonds with a term of one year through you, investors will enjoy an interest rate of 11%/year. five. Regarding the professional investor certificate, people do not need to worry…”.

In addition, this employee said: The security assets of this bond lot, including real estate and business cash flow, will be blocked by the bank during the bond issuance period. Therefore, if there is a risk, the bank will take that money to compensate customers without having to sell the business's assets. That is, investors are not afraid to take risks.

Facing empty-handed risks

Mr. Duong Anh Vu, a financial expert and analyst, often offers high interest rates to attract investors, but in fact, the higher the interest rate, the greater the risk. Therefore, individual investors need to consider when buying corporate bonds, especially individual and retail investors who do not have a professional investor certificate.

Besides, many banks and securities companies now distribute bonds of individual bond issuers to enjoy service fees and interest rate differences. That is, they are not responsible for the timely payment of principal and interest to investors.

Therefore, investors need to carefully study the scope of payment guarantee for the bonds they intend to invest in. Specifically, if there is a risk, the investor can guarantee the payment of the entire principal and interest or only a guarantee to pay a part of the principal and interest, the rest will be borne by the investor "- Mr. Vu said.

Mr. Nguyen Hoang Duong, Deputy Director of the Finance Department of banks and financial institutions under the Ministry of Finance, also warned: Recently, on social networks, there is a phenomenon of brokerage of some companies and organizations. Financial institutions invite people to buy corporate bonds as a form of savings and offer assistance in circumventing the law to become professional investors with a fee of 2-3 million dong.

“Every act of circumventing the provisions of the law to become a professional securities investor not only exposes investors to many risks and losses when buying bonds (possibly losing the entire investment money) but also is a violation of the law. State management agencies will carry out inspection and examination to strictly handle acts that circumvent the law, "said Mr. Duong.

The representative of the Ministry of Finance also noted that corporate bonds are not bank deposits but are issued by enterprises on the principle of self-borrowing, self-paying and self-responsibility for debt repayment ability. Therefore, investors buying corporate bonds are at risk when the enterprise cannot guarantee the obligation to repay the bond principal and interest.•

Learn more about bond issuers

The Securities Law 2019, the Enterprise Law 2020 takes effect from January 1, 2021, and the guiding decrees clearly state that: Individual corporate bonds are investment products only for professional investors, ie. investors with financial capacity, experience, ability to analyze and accept risks when they occur.

Unlike corporate bonds offered to the public, which are granted certificates of registration by the State Securities Commission without limiting investors, individual corporate bonds are not licensed by regulatory authorities.

The Ministry of Finance said that in the individual corporate bond market, most of the collateral assets are real estate and programs, projects, securities or a combination of assets (real estate, securities).

Investors need to learn carefully about the conditions of the collateral, the quality and value of the collateral and the guarantee commitments of the issuer.