What are fundamental terms and conditions of bonds according to latest regulations in Vietnam?
I am an office worker, and I also dabble in stock trading, so I have some knowledge about corporate bonds. However, since I am relatively new to it, I still have some uncertainties and lack clarity on certain aspects. What are fundamental terms and conditions of bonds according to latest regulations in Vietnam?
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What are fundamental terms and conditions of bonds according to latest regulations in Vietnam? - image from internet
Pursuant to Article 6 of the Decree 163/2018/ND-CP on issuance of corporate bonds, effective from 01/02/2019, stipulating fundamental terms and conditions of bonds in Vietnam:
1. Maturity period of bonds in each issuance shall be decided by the bond-issuing enterprise based on an enterprise’s funding demands and market situation.
2. Volume of bonds in each issuance shall be decided by bond-issuing enterprises based on the funding demands and capability of capital mobilization over periods of time.
3. Currency unit used for issuance and payment of bonds
a) With regard to bonds issued to the domestic market, the currency unit shall be Vietnamese dong;
b) With regard to bonds issued to international markets, currency unit used for such issuance shall be subject to regulations of destination markets.
c) Currency unit used for payment of principal and interest shall be the same as the currency unit used for issuance of bonds.
4. Face value of bonds
a) The face value of a bond issued to the domestic market shall be 100,000 (one hundred) Vietnamese dong or shall be the multiple of 100,000 (one hundred thousand) Vietnamese dong.
b) Face value of bonds issued to international markets shall be subject to regulations of destination markets.
5. Bond forms
a) Bonds shall be issued in a form of certificates, entries or electronic data;
b) Bond-issuing enterprises shall decide specific forms of bonds in each issuance under regulations in force at destination markets.
6. Nominal interest rates of bonds
a) The nominal interest rate of a bond may be determined according to one of the following methods: fixed interest rate applied to the entire maturity; floating interest rate; fixed and floating interest rate;
b) If the nominal interest rate is a floating interest rate, bond-issuing enterprises must specify benchmarks for determination of the nominal interest rate in the bond issuance plan and must inform bond purchasers of those benchmarks in use;
c) Enterprises shall make their decision on the nominal interest rate of each issue of bonds where appropriate for financial conditions and debt repayment capabilities. The interest rate of bonds issued by credit institutions shall both comply with provisions of this Decree and conform to regulations on the interest rate quoted by the State Bank of Vietnam.
7. Bond types
a) Non-convertible bond refers to a guaranteed or non-guaranteed bond, and a bond with or without warrant;
b) Convertible bond refers to a guaranteed or non-guaranteed bond, and a bond with or without warrant.
8. Bond transactions: Corporate bonds shall be subject to a restriction on transaction with fewer than 100 investors, exclusive of professional securities investors within one year after completion of an issuance, except in the case of compliance with a Court's decision or inheritance prescribed by laws. After the aforesaid duration, corporate bonds shall be transacted without being subject to any restriction on the number of investors, unless otherwise decided by bond-issuing enterprises.
9. The method of payment of bond principal and interest shall be subject to the bond-issuing enterprise’s decision, depending on the capital demands, issuing market's practices, and shall be informed to investors prior to issuance.
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