What are regulations on process of issuing government bonds for ensuring the market liquidity in Vietnam?

What are regulations on process of issuing government bonds for ensuring the market liquidity in Vietnam?

Pursuant to Clause 2 Article 20 of the Decree 95/2018/NĐ-CP stipulating process of issuing government bonds for ensuring the market liquidity in Vietnam as follows:

a) Where there is a need for government bonds for fulfilling obligations as set forth in a firm quotation, the market maker shall request the State Treasury to issue bonds for ensuring the market liquidation. Such request should set forth code and quantity of government bonds needed for facilitating the market liquidity, and liquidity facilitating period.

b) Based on the market maker’s request, the State Treasury shall request the market maker to enter into a liquidity facility contract and provide a margin in cash for the State Treasury. The margin must be in proportion to the value of issued bonds determined according to the mark-to-market method plus the hedge ratio determined according to the value of bonds issued.

c) After receiving the full payment of margin, the State Treasury shall issue government bonds to the market maker. The term of bonds issued for ensuring the market liquidity must not exceed 28 days from the issuance date, including extension (if any).

d) When the liquidity facility contract becomes mature, the market maker is required to refund government bonds to the State Treasury that will refund the received margin to the market maker after deducting contract performance fees. Contract performance fees paid by the market maker to the State Treasury shall be recorded as state budget revenues.

dd) If the market maker fails to refund government bonds when the liquidity facility contract expires (including extension, if any), the State Treasury shall carry out procedures for terminating the contract and transfer the received margin to state budget and record it as proceeds from issuance of government bonds.

e) The Minister of Finance shall provide specific guidance on bond prices, hedge ratio, contract performance fees and limit on government bonds issued by the State Treasury for facilitating the market liquidity, main contents of a liquidity facility contract and steps for issuance of government bonds for ensuring the market liquidity as regulated herein.

What are regulations on green bonds of the Government in Vietnam?

Pursuant to Article 21 of the Decree 95/2018/NĐ-CP stipulating green bonds of the Government in Vietnam as follows:

1. Green bonds are government bonds issued for raising funds for environmental projects as defined in the Law on environmental protection (also called as green projects) and included in the list of projects to which public investment funds are allocated in accordance with the Law on public investment and the Law on state budget.

2. The Ministry of Finance shall cooperate with the Ministry of Planning and Investment, and the Ministry of Natural Resources and Environment in formulating the Scheme for issuance of green bonds, and submit it to the Prime Minister for approval. The Scheme for issuance of green bonds includes:

a) Purposes;

b) Quantity of green bonds to be issued;

c) Terms and conditions of green bonds;

d) Bond buyers;

dd) Issuance methods;

e) Registration, depositing, listing and trading of bonds;

g) List of investment projects using funds from issuance of green bonds.

3. Terms, conditions, issuance, registration, depositing, listing and trading of green bonds shall comply with regulations in Article 14, Article 15, Article 16, Article 17, Article 18 and Article 19 herein.

What are regulations on foreign currency bonds of the Government in Vietnam?

Pursuant to Article 22 of the Decree 95/2018/NĐ-CP stipulating foreign currency bonds of the Government in Vietnam as follows:

1. Foreign currency bonds are government bonds issued in the domestic market in freely convertible currencies according to the Scheme approved by the Prime Minister.

2. Based on the needs for funds of state budget, the Ministry of Finance shall take charge and cooperate with the SBV in formulating the Scheme for issuance of government bonds in the domestic market in a freely convertible currency, and then submit it to the Prime Minister for consideration. The Scheme includes the following contents:

a) Purposes;

b) Quantity of bonds to be issued;

c) Terms and conditions of bonds: Term, face value; currency of bonds issued and currency used for payment of bonds; interest rate;

d) Bond buyers;

dd) Registration, depositing and trading of bonds;

3. Based on the Scheme for issuance of foreign currency bonds approved by the Prime Minister, the Ministry of Finance shall organize the issuance of bonds in foreign currency by adopting private placement method.

4. Foreign currency bonds shall be registered and deposited at the VSD in accordance with regulations herein, and traded in accordance with applicable regulations of the Law on foreign exchanges.

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