What are eligibility requirements to be satisfied by a lead underwriter regarding issuance of government bonds through underwriting in Vietnam?

What are eligibility requirements to be satisfied by a lead underwriter regarding issuance of government bonds through underwriting in Vietnam?

Pursuant to Clause 2 Article 16 of the Decree 95/2018/NĐ-CP stipulating eligibility requirements to be satisfied by a lead underwriter regarding issuance of government bonds through underwriting in Vietnam as follows:

2. Eligibility requirements to be satisfied by a lead underwriter:

a) It must be a financial institution that is duly established and operating in Vietnam, and licensed to provide securities underwriting as regulated by laws.

b) It must have experience in providing securities underwriting;

c) It must have a feasible underwriting plan which meets the needs of the issuer in each issue.

What are regulations on process of issuing government bonds through underwriting in Vietnam?

Pursuant to Clause 3 Article 16 of the Decree 95/2018/NĐ-CP stipulating process of issuing government bonds through underwriting in Vietnam as follows:

3. Process of issuing bonds through underwriting:

a) Based on underwriting requirements for each bond issue and requirements applicable to lead underwriters set forth in Clause 2 of this Article, the State Treasury shall select qualified organization(s) to act as the lead underwriter or co-lead underwriters for a bond issue. The lead underwriter (or co-lead underwriters) shall select qualified entities to participate in the underwriting syndicate, and submit the list of selected syndicate participants to the State Treasury for consideration.

b) The State Treasury shall provide necessary information concerning the bond issue for the lead underwriter (or co-lead underwriters) and the syndicate participants who will take charge of seeking potential investors. Information to be provided includes: planned quantity and term of bonds to be issued, interest rate for each bond term, and issuance date.

c) The lead underwriter (or co-lead underwriters) and the syndicate participants shall prepare a consolidated report on the needs of investors, including the planned quantity of bonds to be purchased, the quantity of bonds firmly purchased and expected interest rate for each bond term, and then submit it to the State Treasury.

d) The State Treasury shall carry out a negotiation with the lead underwriter (or co-lead underwriters) on the quantity, terms and conditions of bonds (including bond term, interest rate, date of issuance, date of bond settlement, and bond prices), underwriting fee and relevant contents.

dd) Based on results of the negotiation with the lead underwriter (or co-lead underwriters), the State Treasury shall enter into an underwriting agreement with the lead underwriter (or co-lead underwriters) for offering of bonds. The signed underwriting agreement shall be the legal ground for determining rights and obligations of the lead underwriter (or co-lead underwriters) and those of the State Treasury.

e) The lead underwriter (or co-lead underwriters) and syndicate participants shall sell bonds as committed in the signed underwriting agreement. In case of failure to sell all of bonds of an issue, the lead underwriter (or co-lead underwriters) and syndicate participants shall purchase the remaining quantity of bonds.

g) Upon the end of an underwritten bond issue, the State Treasury shall offer government bonds to investors whose names appear in the list of bond buyers submitted by the lead underwriter (or co-lead underwriters).

What are procedures for private placement of government bonds in Vietnam?

Pursuant to Article 17 of the Decree 95/2018/NĐ-CP stipulating procedures for private placement of government bonds in Vietnam as follows:

1. Private placement is a method of offering of government bonds directly to each buyer.

2. The State Treasury shall formulate the plan for private placement of government bonds, and submit it to the Ministry of Finance for approval. The plan for private placement of government bonds includes the following contents:

a) Bond buyers;

b) Planned quantity of bonds to be issued;

c) Bond term;

d) Planned interest rate;

dd) Planned issuance date.

3. Based on the plan for private placement given approved by the Ministry of Finance, the State Treasury shall issue a decision on issuance of bonds, and directly organize the issuance and make payment of bond principal and interest in each issue.

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