MID COURSE INTERNSHIP REPORT THE PROCESS OF CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT AT CT LAND CORPORATION

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS -*** MID-COURSE INTERNSHIP REPORT Major: International Finance THE PROCESS OF CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT AT CT LAND CORPORATION Student: Đinh Hà Phương Student ID: 1913316133 Class: K58CLC2 Supervisor: Chu Mai Linh Ho Chi Minh City, August 2022 INTERNSHIP ORGANIZATION’S REMARKS Organization’s legal name: Address: Tax code: Main business sectors: We hereby confirm that Mr./Ms has completed an internship at our organization from (DD/MM/YYYY) to……………………(DD/MM/YYYY) - For his/her attitude: - For his/her perception of the organization’s activities: - For the data illustrated in the report (Please confirm the accuracy of the data): - Other remarks: Signature (Please write the full title, sign and seal) FOREIGN TRADE UNIVERSITY SOCIALIST REPUBLIC OF VIETNAM HO CHI MINH CITY CAMPUS Independence - Freedom - Happiness MIDTERM PROFESSIONAL REPORT REMARKS Student’s full name: Student code: Name of the report: Remarks: Assessment of compliance with regulations, progress and work ethics (Maximum of 1.0 point, with one decimal number): Ho Chi Minh City, … /… / Supervisor (Signature with full name) DECLARATION I hereby declare this report “The Process of Corporate Bonds Principal and Interest Payment at CT Land Corporation” is my own research work for the purpose of presenting my experiences from the mid-term internship period Except where reference is made in the text of the report, this report contains no material published elsewhere No other person's work has been used without due acknowledgments in the report This report has not been submitted for the award of any degree or diploma in any other tertiary institution I shall take full responsibility for this commitment Ho Chi Minh City, August 2022 Student Đinh Hà Phương ACKNOWLEDGEMENT This report is the result of my internship at position of Finance Intern at CT Land Corp., which is a great opportunity for me to improve my professional knowledge, gain practical experiences and attain more helpful knowledge Therefore, I am grateful for this precious opportunity and for those who have assisted me directly or indirectly in completing the internship report First of all, I would like to express my gratitude and appreciation to Ms Tran Khue Giao – President of CT Land Corp for facilitating the opportunity to perform my internship at the company In addition, I would like to thank my mentor, Ms Nguyen Thi Minh – Finance Manager, for directly supports me with valuable instructions and dedicated advice, which made up an important foundation for me to build up this paper and all the members of the Finance Department for their enthusiastic guidance and for creating good conditions for me to learn as well as sharing valuable work experiences so that I can supplement my knowledge With my endeavour to accomplish the report, I was constantly trying to gather information, brainstorm ideas, and draft the outline Obviously, despite my great effort and concentration, this report cannot be completed without any mistakes Therefore, I want to show my most profound appreciation for my supervisor, Ms Chu Mai Linh, who accompanied me throughout the reporting period and gave me many detailed recommendations on improving my report I wish you all the best, and I hope that I can have another chance to work with you in the future Finally, my deepest thanks come to the teachers at Foreign Trade University – Ho Chi Minh City Campus for their enthusiasm and dedication to teaching and for equipping me with a good foundation of professional knowledge during the past three years of study TABLE OF CONTENTS LIST OF ABBREVIATIONS i LIST OF TABLES AND FIGURES ii PREFACE CHAPTER 1: INTRODUCTION OF CT LAND CORPORATION 1.1 Overview of CT Land Corporation 1.1.1 General information of CT Land Corporation .3 1.1.2 Brief history and development of CT Land Joint Stock Company 1.1.3 Structure of the Finance Department at CT Land Corporation 1.1.5 Financial health and business outcomes of CT Land Corporation in 2018-2020 .6 1.2 Summary of internship activities CHAPTER 2: PROCESS OF CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT AT CT LAND CORPORATION 11 2.1 Overview of corporate bonds issuance at CT Land Corporation 11 2.2 Payment of bond principal and interest process 15 2.2.1 Before issuing bonds 15 2.2.2 When the bonds have just been issued .17 2.2.3 At interest payment period 18 2.3 Overall assessment of issuing corporate bonds procedure at CT Land Corporation 20 2.3.1 Strengths 20 2.3.2 Limitations 21 CHAPTER 3: THE OUTLOOK, RECOMMENDATIONS FOR IMPROVEMENT IN CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT PROCESS AT CT LAND CORPORATION .22 3.1 Outlook of CT Land Corporation .22 3.1.1 Opportunities .22 3.1.2 Challenges 23 3.2 Recommendations for improvement of Corporate Bonds Principal and Interest Payment Process at CT Land Corporation 24 CONCLUSION 26 REFERENCES 27 ANNEX a Annex a Annex c Annex d 20 the BOD, the Accounting Department make payment to BVSC in order to pay the bondholders 21 Table Interest paid to bondholders on the first interest payment period Unit: VND No Name Interest Volume Profit before PIT Profit begin date of bonds tax (5%) (witheld PIT) - 6,219,452,055 - 6,219,452,055 Institutional Investor Logistic F LLC 2,100 2/17/2022 Individual Investor 300 12/13/202 Trần Thanh B Nguyễn Hà A 12/2/2021 Nguyễn Thị 12/27/202 Thu C Total 2,100 90 200 10 6,219,452,05 6,219,452,05 1,577,232,87 78,861,64 453,698,630 22,684,93 1,077,534,24 53,876,71 46,000,000 2,300,000 1,498,371,233 431,013,698 1,023,657,535 43,700,000 78,861,64 2,400 7,796,684,932 7,717,823,288 Source: Casablanca JSC – CT Land After completing the payment of interest to the Bondholders, BVSC sends the Issuer an official letter notifying the bond payment 2.3 Overall assessment of issuing corporate bonds procedure at CT Land Corporation 2.3.1 Strengths Regarding the implementation of the Interest payment and bond issuance process: The bond issuance process at CT Land is fully and strictly carried out because every step in the process complies with the Law issued by the State and with requirements of HNX In addition, the process is consulted and underwritten by a reputable and experienced Securities Company By signing an agency contract with BVSC, CT Land has the opportunity to access BVSC's customer network, helping the process 22 to go efficiently and quickly in finding investors to buy bonds In term of time, the process is always done quickly thanks to CT Land' s application of the "24-hour principle" and digitization approval work, so all submissions are reviewed and approved by BOD within day from the day submitted Regarding interest payment process: The thorough appraisal the value of the Project by reputable appraisal organization before issuing bonds helps control the risk, guaranteed debt repayment source for investors, therefore, increase the creditworthiness of the company as well as the confidence of Investor when decide to buying the bonds In addition, all steps of calculating interest are doublecheck by the Issuer and the Securities Company and notified in writing to ensure the accuracy Regarding the personnel in charge of the process: This process is carried out under management of Back Office of Finance Department, and each Project is assigned to each employee in charge All tasks related to each step will be submitted to Manager and then CFO and BOD for review, evaluation and correction if there are mistakes 2.3.2 Limitations Regarding the risk control of the process: Most of secured properties when issuing corporate bonds at CT Land is real estate Each real estate project often takes a long time to complete and earn profit, therefore revenue based on the construction progress is uncertain, which in the other words means CT Land has low liquidity ratio In addition, for secured properties that are projects and assets to be formed in the future, when the real estate market has many fluctuations, the value of secured property may be reduced and the Company will not be able to pay off the bond principal and interest Regarding the cost for bonds issuance: CT Land Corp is not a public company so it can only issue bonds by private placement Unlike corporate bonds offered to the public, which are issued with certificates of registration by the State Securities Commission to unlimited investors, corporate bonds issued by private placement are not licensed by regulatory authorities and the number of investors is limited, usually individual investors Therefore, CT Land have to pay a much higher interest 23 rate for Bondholders and have to pay additional significant fees for services such as appraisal, advisory, underwriting, account management for the agency 24 CHAPTER 3: THE OUTLOOK, RECOMMENDATIONS FOR IMPROVEMENT IN CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT PROCESS AT CT LAND CORPORATION 3.1 Outlook of CT Land Corporation 3.1.1 Opportunities Firstly, the bonds market potential is huge due to the complete legal framework Through the development process, the regulations on bond issuance in general have undergone many changes towards completion in order to help bond issuance become an important capital raising channel of enterprises Since Decree No 163 took effect until the end of 2019, there have been 848 corporate bond issuances with the actual issuance volume of VND 259,377 billion This is a very encouraging figure, showing that the development of the bond market has great potential and is an effective solution for the financial needs of businesses Besides, the demand for bonds or the attractiveness of corporate bonds to investors, including individual investors, is growing This is because the return that the investor earns from bonds is higher than that of a savings deposit Compared to deposit interest rates at commercial banks, corporate bond yields will be 0.8%1.7%/year higher in 2020 and this gap will widen in 2021 and 2022, especially when commercial banks simultaneously decrease interest rates Lastly, CT Land has 30 years of experience in the real estate development In addition, CT Land is planning to IPO in 2022-2023, which not only helps CT Land access long-term capital raising channels but also helps to promote the brand awareness and increase the market value of the Company This is an advantage and opportunity for CT Land when Vietnam is accelerating up credit ratings for both privately issued and publicly issued bonds to enhance the publicity and transparency of the corporate bond market 25 Figure Corporate bonds issuance in the first months of 2022 Unit: VND billion Series 35000 30000 30578 25923 24105 25000 16472 20000 15000 10000 1800 5000 January February 3621 March April May June Source: VNBussiness 3.1.2 Challenges The first biggest challenge confronting the company is the Vietnamese bond market At present, real estate bonds are facing many problems with a series of cases showing signs of law violations related to capital mobilization from bond issuance This is considered an ominous turning point for the corporate bond fundraising channel It not only puts pressure on many banks but also affects real estate businesses and investors participating in the real estate bond market To solve the above problems, the Ministry of Finance is planning to tighten up on the corporate bonds issuance by amending regulations on conditions for issuing corporate bonds, measures and sanctions to increase deterrence and the power of the State Securities Commission in managing cash flow and supervising capital mobilization activities in the market The revised Decree 153 which is about to be issued by the Ministry of Finance, requires businesses when issuing bonds to register and put these bonds to trade through the official "market” This will pose a challenge for CT Land as the Company is not yet a public company and can only issue private placement corporate bonds 26 The last but not least important challenge that enterprises in general and CT Land in particular are facing when issuing bonds, that is, self-improvement in governance, finance, and information transparency to meet the requirements of the market 3.2 Recommendations for improvement of Corporate Bonds Principal and Interest Payment Process at CT Land Corporation First of all, CT Land shall have responsibility to coordinate with other responsible parties in promoting corporate bond transactions on the secondary market In an active secondary market, bonds issued can be sold wholesale and retail to organizations and individuals more widely, helping increase the liquidity of bonds, thereby increasing the attractiveness of the market, creating favorable conditions for enterprises to carry out primary issuances to mobilize capital for production and business development Regarding the risk management, CT Land must strengthen and at the same time, strictly complied with financial governance through risk control measures, requirements and regulations for both financing and investing activities Besides, the Company have to monitor its liquidity and apply an appropriate risk assessment mechanism to track actual cash flows of ongoing projects and detect risks related to cash flow in order to increse the creditworthiness and reinforce investors’ confidence when deciding to buy bonds Besides, to optimize the cost of capital, CT Land should build and strengthen relationships with domestic and foreign financial institutions such as: banks, investment funds… to access all possible sources of capital through suitable channels, including but not limited to credit, shares and/or bonds, derivatives… The department that is in charge of prepare the capital raising plan must regularly, fully and promptly update their expertise towards any newly-promulgated circulars, regulations and laws related to bond issuance as well as keep a close watch on the situation of bond issuance in the market to make effective investment decisions, then prepare for the next issuance and promptly update and supplement the documents if required Regarding human resources, CT Land needs to stabilize personnel structure of Finance Force in general and Finance Department in particular; provide ongoing 27 advanced training for all levels of Finance Force staff; and prepare an effective HR plan for the 5-year outlook To this, the Company should promote cooperation with top universities in Ho Chi Minh City such as: Foreign Trade University, University of Economics Ho Chi Minh City, Banking University of Ho Chi Minh City to access young and talented human resources 28 CONCLUSION Corporate bonds are a popular capital mobilization channel in developed countries and are considered highly effective for businesses In Vietnam, with the current capital and financial market, issuing bonds is also the optimal choice, especially for real estate businesses which need large amounts of money to invest and develop housing projects, commercial centers, office buildings, and infrastructure, It can be said that capital from bonds is still the main "life source" of many real estate businesses, including CT Land at the present time Although there are still many shortcomings in mobilizing capital through corporate bonds issuance, in both the external market and the company’s internal process, CT Land will make the most of its advantages in optimizing the bond issuance process, ensuring the principal and interest payments to Bondholders To achieve that goal, CT Land is required to have coordinated measures: with the Company's efforts as the main one, along with the support of the Government, the Ministry of Finance, the State Securities Commission, Ha Noi and Ho Chi Minh Stock Exchange as well as other agencies In general, this mid-course internship report has briefly presented the corporate bond issuance procedure and more specifically, the bond principal and interest payment process at CT Land Corporation based on the knowledge that I have learned at the university as well as weeks of practical experience at the Back Office - Finance Department Although the short internship period may create barriers for me in fully understanding the entire process, I highly appreciate this treasured time with sincerest thanks to the considerate guidance of the staff here and the helpful instruction of my professor Eventually, though my suggestions may not be fully worked-out as my expertise is limited but I still hope that my efforts and recommendations, in one way or another, make some contributions to the overall improvement in CT Land’s bond issuance activities I sincerely have faith in the company's permanent and sustainable development in the future, I hope the company will always attain as many glorious achievements as possible in the upcoming journey that awaits them 29 REFERENCES CT Land 2021 CT Land Profile CT Land 2021 CT Land Business Plan CT Land, 2022 Quy trình phát hành trái phiếu CT Land, 2021 CT Land Quarterly Consolidated Financial Statements CT Land, 2020 CT Land Consolidated Financial Statements CT Land, 2019 CT Land Consolidated Financial Statements CT Land, 2018 CT land Consolidated Financial Statements The Government, 2018, Decree No 163/2018/ND-CP about Issuance of Corporate Bonds The Government, 2020, Decree no 153/2020/ND-CP prescribing private placement and trading of privately placed corporate bonds in domestic market and offering of corporate bonds in international market 10 Nguyễn Thị Minh, 2020, Pháp luật chào bán riêng lẻ trái phiếu doanh nghiệp: Bất cập kiến nghị hồn thiện, Ấn phẩm Tạp chí Nghiên cứu Lập pháp, Số 21 tháng 11/2020 11 Law Firm, 2021 Phát hành trái phiếu doanh nghiệp theo hình thức riêng lẻ thị trường Available at: < https://tpllawfirm.vn/vi/quy-trinhphat-hanh-trai-phieu-cua-doanh-nghiep-theo-hinh-thuc-rieng-le-tai-thitruong-trong-nuoc/> [Accessed 27th July 2022] 12 Tạp chí Ngân hàng, 2022 Rủi ro phát hành trái phiếu bất động sản số khuyến nghị Available at: < https://tapchinganhang.gov.vn/rui-ro-vephat-hanh-dau-tu-trai-phieu-bat-dong-san-va-mot-so-khuyen-nghi.htm> [Accessed 27th July 2022] 13 Kinh tế Dự báo, 2021 Phát triển thị trường trái phiếu doanh nghiệp Việt Nam Available at: https://kinhtevadubao.vn/giai-phap-phat-trien-thitruong-trai-phieu-doanh-nghiep-o-viet-nam-20645.html [Accessed 4th August 2022] 14 Vnbussiness, 2022 Phát hành trái phiếu doanh nghiệp tăng trở lại, xuất hành vi bất thường Available at: https://vnbusiness.vn/tien-te/phat- 30 hanh-trai-phieu-doanh-nghiep-tang-tro-lai-xuat-hien-mot-so-hanh-vi-batthuong-1086810.html [Accessed 4th August 2022] 15 VnEconomy, 2022 Giao dịch trái phiếu doanh nghiệp qua “chợ” Available at: https://vneconomy.vn/giao-dich-trai-phieu-doanh-nghiep-seduoc-qua-cho.htm [Accessed 4th August 2022] 31 ANNEX Annex 32 33 Annex 34 Annex ... Summary of internship activities CHAPTER 2: PROCESS OF CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT AT CT LAND CORPORATION 11 2.1 Overview of corporate bonds issuance at CT Land Corporation. .. CHAPTER 2: PROCESS OF CORPORATE BONDS PRINCIPAL AND INTEREST PAYMENT AT CT LAND CORPORATION 2.1 Overview of corporate bonds issuance at CT Land Corporation Issuing bonds is considered one of the ways... 2021 CT Land Profile CT Land 2021 CT Land Business Plan CT Land, 2022 Quy trình phát hành trái phiếu CT Land, 2021 CT Land Quarterly Consolidated Financial Statements CT Land, 2020 CT Land Consolidated