Documentation Proving the Organization Meets the Conditions to Become the Principal Guarantor/Co-Principal Guarantor for Bond Issuance of the Government of Vietnam
Documents Proving the Organization Meets the Conditions to Become a Principal/Co-Principal Underwriter for Government Bonds of Vietnam
Based on the provisions of Clause 1, Article 16 of Decree 95/2018/ND-CP, the underwriting of Government bonds of Vietnam is a method of selling Government bonds of Vietnam through an underwriting syndicate including:
(1) Principal underwriter and/or co-principal underwriters;
(2) Underwriting organizations and/or co-underwriting organizations.
The documents proving the qualifications to become a principal/co-principal underwriter for Government bonds of Vietnam are part of the registration dossier of organizations that meet the conditions and have the desire to become a principal/co-principal underwriter.
In Clause 3, Article 1 of Decree 83/2023/ND-CP the documents proving the qualifications to become a principal/co-principal underwriter for Government bonds of Vietnam in the domestic market include:
(1) Copy of the Business Registration Certificate,
(2) Establishment and operation license or equivalent legal document (Copy extracted from the original book, certified copy by the competent state authority, or non-certified copy presented with the original for comparison);
(3) Documents proving the organization’s experience in the field of securities underwriting.
Documents Proving the Organization Meets the Conditions to Become a Principal/Co-Principal Underwriter for Government Bonds of Vietnam (Image from the internet)
Conditions to Become a Principal Underwriter and Process for Underwriting Government Bonds of Vietnam in the Domestic Market
Based on the provisions of Article 16 of Decree 95/2018/ND-CP, revised by Clause 2, Article 1 of Decree 83/2023/ND-CP, the conditions to become a principal underwriter and the process for underwriting Government bonds in the domestic market are as follows:
(*) Conditions to Become a Principal Underwriter:
- Financial institutions with the function of providing securities underwriting services as stipulated by law, legally established, and operating in Vietnam;
- Having experience in the field of securities underwriting;
- Having a feasible underwriting plan to meet the issuance requirements of the issuer for each issuance.
(*) Process for Underwriting Government Bonds:
- Based on the requirements of each underwriting batch and the conditions of the principal underwriter specified in Clause 2, Article 16 of Decree 95/2018/ND-CP, the State Treasury selects the principal/co-principal underwriter for each underwriting batch as per Clause 4, Article 16 of Decree 95/2018/ND-CP, supplemented by Clause 3, Article 1 of Decree 83/2023/ND-CP.
- The State Treasury provides basic information about the issuance to the principal/co-principal underwriter and the underwriting syndicate to seek investors. Information provided includes: expected issuance volume, expected terms of issuance, interest rate orientation for each issuance term, expected issuance period.
- The principal/co-principal underwriter and members of the underwriting syndicate consolidate the bond purchase demands of investors including: expected purchase volume, definite purchase volume, and expected interest rates for each term and send it to the State Treasury.
- The State Treasury negotiates with the principal/co-principal underwriter on the volume, conditions, and terms of the bonds (term, issuance interest rate, issuance date, bond payment date, bond selling price), underwriting fees, and other related contents.
- Based on the negotiation results with the principal/co-principal underwriter, the State Treasury signs an underwriting contract with the principal/co-principal underwriter to sell the bonds. The underwriting contract is the legal basis confirming the rights and obligations of the principal/co-principal underwriter; the rights and obligations of the State Treasury.
- The principal/co-principal underwriter and the underwriting syndicate are responsible for distributing the bonds as committed in the underwriting contract. In the case of incomplete bond distribution, the principal/co-principal underwriter and the underwriting syndicate are responsible for purchasing the remaining volume.
- Upon completion of the underwriting issuance, the State Treasury issues Government bonds of Vietnam to investors according to the list provided by the principal/co-principal underwriter.
Subjects Eligible to Purchase Government Debt Instruments of Vietnam
Based on the provisions of Article 6 of Decree 95/2018/ND-CP:
(1) Subjects eligible to purchase Government debt instruments issued in the domestic market:
- Domestic and foreign organizations and individuals may purchase Government debt instruments with no quantity restrictions unless otherwise regulated by law;
- Securities investment funds and voluntary pension funds may purchase Government debt instruments through entrustment to a fund management organization;
- State financial funds outside the budget may purchase Government debt instruments as per relevant legal regulations.
(2) Subjects eligible to purchase Government debt instruments issued in the international market are organizations and individuals as regulated by the issuance market.
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