What are regulations on issuance and payment of guaranteed bonds in Vietnam?

What are regulations on issuance and payment of guaranteed bonds in Vietnam?

Pursuant to Article 49 of the Decree 91/2018/NĐ-CP stipulating issuance and payment of guaranteed bonds in Vietnam as follows:

1. According to the Ministry of Finance’s notification of issuance limit specified in Clause 3 Article 48 herein, the plan for disbursement of funds for dedicated credit programs and plan for repayment of mature guaranteed bonds, the relevant bank for social policies shall submit its annual bond issuance plan, which is divided into quarters, to the Ministry of Finance. The Ministry of Finance shall send a written notification if it does not consent with the bank’s bond issuance plan.

2. The bank for social policies shall organize the issuance of guaranteed bonds in the form of bidding in accordance with applicable law regulations on Government’s issuance of debt instruments.

3. Quantity and interest rate of guaranteed bonds:

a) The quantity of bonds to be issued in each bond issue shall be decided by the bank for social policies on the basis of the issued guarantee limit, the plan registered with the Ministry of Finance as prescribed in Clause 1 of this Article, and conditions, ability for raising funds in the market. If the actual quantity of bonds issued in the quarter does not reach the issuance limit registered with the Ministry of Finance, the difference may be carried forward to the succeeding quarter. If the quarter’s quantity of bonds to be issued has to be increased, a written notification shall be sent to the Ministry of Finance 10 working days before the planned date of issuance;

b) The interest rate is decided by the bank for social policies according to the market developments at the issuance period and the bracket of interest announced by the Ministry of Finance.

4. Within 05 working days from the end of each issue, the bank for social policies shall submit a report to the Ministry of Finance in order for the Ministry of Finance to determine the actual guarantor’s liability as prescribed by law. Based on the bank’s report, the Ministry of Finance shall issue a confirmation of guarantor’s liability regarding the issued guaranteed bonds on a quarterly basis.

5. Fees for issuance and payment of bonds shall be covered by the relevant bank for social policies in accordance with applicable laws.

6. Government-guaranteed bonds issued by banks for social policies shall be registered and deposited at Vietnam Securities Depository; listed and traded at Stock Exchanges in accordance with applicable law regulations on registration, depository, listing and trading of Government debt instruments.

7. Repurchase and swap of government-guaranteed bonds:

a) A bank for social policies may repurchase or swap government-guaranteed bonds in order to serve its debt restructuring. Repurchase and swap of guaranteed bonds must be carried out openly, transparently and in conformity with market rules;

b) Before repurchasing or swapping bonds, the relevant bank for social policies shall formulate and submit its plan for repurchase or swap of guaranteed bonds to the Prime Minister for approval. A plan for repurchase or swap of guaranteed bonds includes: purpose of repurchase or swap; terms and conditions of bonds to be repurchased or swapped; planned date of repurchase or swap; funds for repurchase or swap bonds; estimated outstanding bonds guaranteed by the government after repurchase or swap; c) At least 10 working days before the planned date of repurchase or swap, the bank for social policies shall request the Ministry of Finance in writing to notify the bracket of interests on repurchased bonds or discount rates on swapped bonds;

d) Within 10 working days from the end of each repurchase or swap of guaranteed bonds according to the plan approved by the Prime Minister, the bank for social policies shall submit a report to the Ministry of Finance on results of its repurchase or swap of guaranteed bonds in order for the Ministry of Finance to determine and adjust the actual liability of the guarantor;

dd) The bank for social policies shall arrange funds and cover fees for carrying out the repurchase or swap of guaranteed bonds;

e) Procedures for repurchase or swap of government-guaranteed bonds shall be performed in accordance with the Minister of Finance’s guidance on repurchase and swap of Government debt instruments.

What are regulations on using funds from issuance of guaranteed bonds in Vietnam?

Pursuant to Article 50 of the Decree 91/2018/NĐ-CP stipulating regulations on using funds from issuance of guaranteed bonds in Vietnam as follows:

1. Each bank for social policies shall record, manage and use proceeds from the issuance of guaranteed bonds in accordance with its Regulation on financial management and bond issuance scheme approved by the Prime Minister as prescribed in Clause 3 Article 48 herein.

2. The bank for social policies must not provide collateral for issuing guaranteed bonds according to the bond issuance scheme approved by the Prime Minister.

3. The bank for social policies shall manage and use funds from the issuance of guaranteed bonds in conformity with applicable law regulations on issuance and management of government guarantees.

What are regulations on government guarantee fee charged to banks for social policies in Vietnam?

Pursuant to Article 51 of the Decree 91/2018/NĐ-CP stipulating government guarantee fee charged to banks for social policies in Vietnam as follows:

1. The government guarantee fee charged to a bank for social policies is 0.25%/year of outstanding guaranteed bonds.

2. Collection, transfer and use of guarantee fees paid by banks for social policies shall be performed in accordance with provisions in Article 28 and Article 29 herein.

3. A bank for social policies may aggregate guarantee fee paid in its operating expenses.

Best regards!