Did you know that corporate bonds in Moldova are unlocking a financial transformation, raising millions for businesses, and opening doors for investors? For years, Moldova’s capital markets have been characterized by limited activity, primarily consisting of equity securities and government bonds. The emergence of corporate bonds marks a significant turning point, signaling a transformation in the country`s financial ecosystem. Recent regulatory reforms and successful stories of bond issuances are redefining the market, creating new investment opportunities for market participants.
Reshaping Moldova’s Financial Landscape
The revival of corporate bond activity in Moldova was spurred by the initiatives of leading financial institutions like Moldova Agroindbank (Maib). In 2023, Maib launched its first corporate bond program, raising MDL 258 million from over 740 investors through a public offering. This marked a significant milestone, demonstrating both the demand for alternative investment instruments and the development of Moldova’s financial sector. Building on this momentum, Maib’s subsequent bond programs have further expanded the market, offering competitive returns and attracting diverse investor classes, including retail and institutional participants.
Legal Framework
The issuance of corporate bonds in Moldova is governed by the Law on the Capital Market, No. 171/2012, supported by regulatory guidelines issued by the National Commission for Financial Markets (Commission). In 2022, the Commission introduced the Practical Guidelines for the Issuance and Trading of Corporate Bonds, offering much-needed clarity for both issuers and investors regarding the procedural and regulatory requirements. While joint-stock companies have long had the legislative foundation to issue bonds, significant progress was achieved in May 2022 through amendments to the Law on Limited Liability Companies, No 135/2007. These amendments simplified the issuance process for limited liability companies (LLCs), making it more accessible for LLCs to access the bond market.
Legal Requirements for Issuers
The procedure for issuing corporate bonds in Moldova varies based on whether the issuance is conducted through private placement or public offering. Both processes share core steps, albeit with distinct regulatory nuances. The key steps for bond issuance are: (1) Approval of bond issuance by the issuer’s governing body, which defines the bond type, interest rate, maturity, and issuance size. Public offerings require the engagement of an authorized investment firm, while for private placements this step is optional but recommended. (2) Preparation of subscription agreement, which outlines terms for investors. Public offerings require additional documentation, including a prospectus and, where applicable, collateral-related agreements or guarantees. (3) Opening a temporary bank account to collect subscription funds. (4) Placement of bonds to a selected group of investors (in case of private placement) or to the general public (in case of public offering). (5) Approval of reports and investor list detailing the issuance results, including the final list of subscribers (investors). (6) Submission to the Commission of the issuance report and supporting documentation for the purposes of registration in the Register of Securities Issuers and subsequently with the Central Securities Depository. (7) Utilization of funds after completing the issuance process. Private placement and public offering differ not only in terms of the placement method but also by security type. Therefore, there are secured bonds, which are backed by sufficient and solid guarantees, such as pledges of the issuer’s assets, third-party assets, bank guarantees, third-party guarantees, or insurance policies; and unsecured bonds, which are not backed by specific assets but can be issued if the issuer meets certain conditions set by regulatory authorities.
Corporate Bonds Are a Game-Changer – And the Roadblocks Ahead
Corporate bonds are transforming how companies in Moldova access capital. For issuers, they offer a smarter way to secure long-term funding while keeping full ownership intact. They also enable companies to align repayment schedules with their operational cash flows, making them a more practical alternative to traditional loans. For investors, corporate bonds provide a stable, higher-yielding alternative to traditional savings options. However, challenges persist, including the need for greater financial literacy among the populace and the development of a robust secondary market to ensure liquidity.
The Way Forward
Moldova’s corporate bond market is at a pivotal juncture. The combination of a supportive regulatory environment, successful issuances, and growing interest from both issuers and investors underscores its potential. By addressing existing challenges and leveraging opportunities for innovation, Moldova can position itself as a competitive player in the regional capital markets. Corporate bonds have the potential to serve as a transformative force in Moldova’s financial future. As the market matures, these instruments will become a cornerstone of the country’s economic growth, enabling businesses to access capital while offering investors reliable opportunities.
By Nicolina Turcan, Head of Fintech and E-Payments, ACI Partners
This article was originally published in Issue 11.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.