New Provisions on the Private Placement Plan of the Government of Vietnam's Bonds from January 15, 2024, in the Domestic Market.
New Content on the Scheme of Private Issuance of Government Bonds of Vietnam from January 15, 2024, in the Domestic Market
According to the provisions of Clause 10, Article 3 of the Public Debt Management Law 2017, Government bonds of Vietnam are debt instruments issued by the Government of Vietnam to raise capital for the state budget or restructure debt.
Currently, the scheme for private issuance of Government bonds of Vietnam in the domestic market is specified in Clause 2, Article 17 of Decree 95/2018/ND-CP as follows:
The State Treasury develops a scheme for the private issuance of Government bonds of Vietnam and reports it to the Ministry of Finance for approval. The private issuance scheme includes the following basic contents:
a) Bond buyers;
b) Expected issuance volume;
c) Bond maturity;
d) Expected interest rate;
e) Expected issuance time.
According to Decree 83/2023/ND-CP, which amended the provisions on the private issuance of Government bonds of Vietnam, the scheme for private issuance of Government bonds in the domestic market has been revised as follows:
The State Treasury develops a scheme for the private issuance of Government bonds of Vietnam and reports it to the Ministry of Finance for approval. The private issuance scheme includes the following basic contents:
a) Bond buyers;
b) Expected issuance volume;
c) Bond maturity;
d) Expected interest rate;
e) Expected issuance time;
f) Expected private issuance form (the State Treasury issues directly or selects a distribution agent).
Thus, compared to the current regulations, the scheme for the private issuance of Government bonds of Vietnam from January 15, 2024, in the domestic market will add a new content regarding "Expected private issuance form (the State Treasury issues directly or selects a distribution agent)". This addition complies with the new regulations in Decree 83/2023/ND-CP, whereby the State Treasury can issue directly or select a distribution agent for Government bonds of Vietnam.
New Content on the Scheme of Private Issuance of Government Bonds of Vietnam from January 15, 2024, in the Domestic Market (Image from the internet)
Scheme for Issuing Government Bonds of Vietnam in the International Capital Market: What Does It Include?
Based on the provisions of Article 28 of the Public Debt Management Law 2017:
The scheme for issuing Government bonds of Vietnam in the international capital market includes the following main contents:
- The necessity of issuing Government bonds of Vietnam in the international capital market;
- The need, capacity to raise capital, domestic macroeconomic situation, Vietnam's credit rating, and the international capital market situation;
- Issuance form, raised volume, maturity period, expected interest rate, issuance currency, and fundraising market;
- The plan for using the raised funds;
- Assessing the efficiency of using borrowed capital and the impact of new loans on public debt, and public debt safety indicators.
Who Are the Buyers of Government Debt Instruments of Vietnam?
Based on the provisions of Article 6 of Decree 95/2018/ND-CP:
(1) Buyers of Government debt instruments of Vietnam issued in the domestic market include:
- Organizations and individuals within and outside the country can buy Government debt instruments of Vietnam in unlimited quantities, unless otherwise provided by law;
- Securities investment funds and voluntary pension funds can buy Government debt instruments of Vietnam through entrusting fund management organizations;
- Off-budget state financial funds can buy Government debt instruments of Vietnam according to relevant legal regulations.
(2) Buyers of Government debt instruments of Vietnam issued in the international market include organizations and individuals as prescribed by the issuance market.
How Are Government Bonds of Vietnam Traded?
Based on the provisions of Article 19 of Decree 95/2018/ND-CP:
(1) Government bonds of Vietnam are traded on the stock market via matching orders and/or agreements as per securities law and the trading rules of the Stock Exchange approved by competent authorities.
(2) Government bonds of Vietnam are traded on the stock market in the following forms:
- Regular trading;
- Repo and reverse repo trades;
- Other types of transactions as prescribed by securities law.
(3) Repo and reverse repo trades of Government bonds of Vietnam as specified in Point b, Clause 2, Article 19 of Decree 95/2018/ND-CP are executed based on the following principles:
- The maximum term of the transaction does not exceed 1 year;
- Parties to the transaction mutually agree and sign a transaction contract, including basic content such as volume; interest rate (or bond price); term; collateral; risk prevention ratio; rights and responsibilities of related parties; handling of collateral in case parties fail to make payments according to the agreement.
(4) The State Bank of Vietnam guides the classification of debts and provisioning for risks for credit institutions conducting repo and reverse repo trades of Government bonds of Vietnam on the stock market.
(5) The Minister of Finance provides guidance on trading Government bonds of Vietnam on the stock market according to Decree 95/2018/ND-CP and securities law.
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