What are principles for issuance of bonds and use of raised funds regarding privately placed corporate bonds in Vietnam?

What are principles for issuance of bonds and use of raised funds regarding privately placed corporate bonds in Vietnam?

Pursuant to Article 5 of the Decree 153/2020/NĐ-CP (amended by Article 1 of the Decree 65/2022/NĐ-CP) stipulating principles for issuance of bonds and use of raised funds regarding privately placed corporate bonds in Vietnam as follows:

1. An issuer shall issue bonds according to the rules of conventional loans, assume responsibility for the use of raised funds and ensure its repayment capacity.

2. Bonds are issued for executing investment projects/programs, restructuring the issuer’s debts or serving other purposes as prescribed in specialized laws. The issuer is required to clearly indicate purposes of the bond issue in its bond issuance plan, which is prepared according to Article 13 of this Decree, and disclose the same to investors to serve their subscription for the bond issue. The funds raised from a bond issue shall be used for the purposes which have been defined in the issuer’s bond issuance plan and notified to investors.

3. In addition to the provisions in Clauses 1 and 2 of this Article, the funds raised from the issuance of green bonds must be separately recorded and managed, and disbursed to the environmental protection projects/projects that generate environmental benefits specified in the approved bond issuance plan.

4. With regard to bonds issued in the domestic market, their terms and conditions as prescribed in Article 6 of this Decree may be changed if the change is approved by:

a) the issuer’s competent authority; and

b) a number of bondholders that represents at least 65% of total outstanding bonds of the same type;

5. Information about any changes in terms and conditions of bonds must be disclosed by the issuer as ad hoc information as prescribed in Article 22 of this Decree.

What are fundamental terms and conditions of privately placed corporate bonds in Vietnam?

Pursuant to Article 6 of the Decree 153/2020/NĐ-CP (amended by Clause 4 Article 1 of the Decree 65/2022/NĐ-CP) stipulating fundamental terms and conditions of privately placed corporate bonds in Vietnam as follows:

1. Bond term: decided by the issuer in each offering based on its demands for funds.

2. Quantity of bonds issued: decided by the issuer in each offering based on its demands for funds.

3. Currency used in issuance and payment for bonds

a) The currency used in issuance and payment of bond principals and interests of bonds offered in the domestic market is Vietnamese dong (VND).

b) The currency used in issuance and payment of bond principals and interests of bonds offered in the international market is a foreign currency according to regulations adopted in the issuing market and regulations on foreign exchange management.

4. Face value:

a) Face value of a bond offered in the domestic market is VND 100.000.000 (one hundred million) or a multiple of VND 100.000.000 (one hundred million).

b) Face value of a bond offered in the international market shall comply with regulations adopted in the issuing market.

5. Bond form:

a) Bonds are offered in the forms of certificates, book entries or electronic data;

b) The form of bond in each offering shall be decided by the issuer according to regulations adopted in the issuing market.

6. Coupon rate:

a) The coupon rate of a bond may be the fixed interest rate over its entire term, floating interest rate or a combination of these two interest rates.

b) If the coupon rate is the floating interest rate or combination of the fixed interest rate and floating interest rate, the issuer shall indicate the reference rate which is used as the basis for determining the floating interest rate in the bond issuance plan and also notify it to bond buyers.

c) The issuer shall decide the coupon rate in each bond offering in conformity with its financial health and repayment capacity. In addition to the provisions herein, the coupon rate of bonds issued by a credit institution must also comply with regulations on interest rates adopted by the State Bank of Vietnam (SBV).

7. The bond types shall be decided by the issuer in accordance with regulations of law.

8. The method of principal and interest payment shall be decided by the issuer based on its demand for funds and the practices of the issuing market, and shall be notified to investors before the bond offering.

What are regulations on redemption of bonds before maturity and bond swaps regarding privately placed corporate bonds in Vietnam?

Pursuant to Clause 5 Article 1 of the Decree 65/2022/NĐ-CP (amending Clause 1 and 2, Article 7 of the Decree 153/2020/NĐ-CP) stipulating as follows:

1. The issuer is entitled to redeem bonds before maturity or conduct bond swaps. The redemption of bonds offered in the international market before maturity must comply with SBV’s regulations on foreign exchange management. Bonds must be disposed of after redemption.

2. The entity competent to approve the bond issuance plan shall have the power to approve the plan for redemption of bonds before maturity or bond swap, except cases of compulsory redemption prescribed in Point b Clause 3 of this Article.

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