Vietnam: Things to know about treasury bills

Section I Chapter II of Decree No. 95/2018/ND-CP of Vietnam’s Government stipulates issues relating to treasury bills. To be specific:

Terms and conditions of treasury bills

- Term:

+ Standard terms of treasury bills are 13 weeks, 26 weeks or 52 weeks;

+ Other terms of treasury bills shall be subject to the Minister of Finance’s decisions made according to the needs for funds and market developments provided that a term shall not exceed 52 weeks.

- Face value: The face value of a treasury bill is VND 100,000 or its multiple.

- Currency used in issuance and payment for treasury bills is VND.

- Forms:

+ Treasury bills are issued in the forms of book entries or electronic data depending on each method of issuance;

+ The issuer shall decide the form of treasury bills in each issue.

- Interest rate:

+ Interest rate of treasury bills issued through bidding shall be decided by the State Treasury within the interest rate bracket announced by the Ministry of Finance.

+ Interest rate of treasury bills issued directly to the State Bank of Vietnam (SBV) shall be discussed and agreed upon between the Ministry of Finance and the SBV in accordance with regulations of Clause 3 Article 12 of Decree No. 95/2018/ND-CP.

- Issuance methods:

+ Bidding for issuance of treasury bills according to regulations of Clause 1, Clause 2, Clause 3, Clause 4, Clause 5 Article 15 of Decree No. 95/2018/ND-CP.

+ The issuer shall directly organize bidding for issuance of treasury bills or organize bidding via the Operations Center of the SBV in accordance with regulations of the Ministry of Finance.

+ Issuance of treasury bills directly to the SBV in accordance with regulations in Article 12 of Decree No. 95/2018/ND-CP.

- Method for payment of treasury bills: The sum of principal and interest of treasury bills shall be paid in a lump sum at their maturity date.

Issuing treasury bills directly to the State Bank of Vietnam

- In case the central-government budget is in temporary deficit, the Ministry of Finance shall take charge and cooperate with the SBV in formulating the scheme for issuance of treasury bills directly to the SBV, and then submit it to the Prime Minister for decision. The Scheme for issuance of treasury bills includes the following contents:

+ Purposes;

+ Quantity, term, form;

+ Face value;

+ Interest rate, planned date of issuance of treasury bills;

+ Payment and funds for payment of treasury bills upon their maturity date;

+ Registration, depositing, listing and trading of treasury bills (if any).

- Pursuant to the Decision of the Prime Minister, the Ministry of Finance shall reach an agreement with the SBV on the quantity, interest rate and term of each issue of treasury bills. If the issuance date and the maturity date of treasury bills are not in the same budget year, regulations in advance from the SBV in Clause 1 Article 58 of the Law on state budget and Article 26 of the Law on State Bank of Vietnam shall apply.

- Interest rate of treasury bills issued directly to the SBV shall be discussed and agreed upon between the Ministry of Finance and the SBV by reference to the interest rate of treasury bills issued through bidding or the interest rate of treasury bills issued by the SBV or the interest rate of government bonds whose remaining effective period at the nearest date is equivalent to the term of treasury bills.

- Based on the agreed quantity, interest rate, term and date of issuance, the State Treasury shall conclude a contract for selling treasury bills directly to the SBV, which must specify terms and conditions of each issue, including: quantity, term, interest rate, issuance date, selling price, settlement date, maturity date, account receiving buying amounts, registration, depositing, listing and trading of treasury bills (if any).

- The State Treasury shall record the amounts paid by the SBV for purchasing treasury bills into the state budget and make payment of treasury bills when they are due.

Registration, depositing, listing and trading of treasury bills

- Treasury bills issued through bidding shall be registered, deposited, listed and traded in accordance with regulations on registration, depositing, listing and trading of government bonds.

- Treasury bills issued directly to the SBV shall be registered and deposited at the VSD, and listed at the Stock Exchange at the request of the SBV and the State Treasury.

More details can be found in Decree No. 95/2018/ND-CP of Vietnam’s Government, which takes effect from July 01, 2018.

-Thao Uyen-

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