Requirements for purchase of corporate bonds by credit institutions in Vietnam

On June 30, 2018, the State Bank of Vietnam issued Circular No. 22/2016/TT-NHNN on purchase of corporate bonds by credit institutions, branches of foreign banks.

According to Circular No. 22/2016/TT-NHNN of the State Bank of Vietnam, credit institutions, foreign bank's branches shall assess and verify the plan and conditions of corporate bond issuance to consider deciding the purchase of corporate bonds upon fully satisfying following requirements:

- Regarding purchase of corporate bonds in the initial offering:

+ Bonds are issued in compliance with provisions of laws;

+ The enterprise’s purposes of using proceeds from the corporate bond offering are legal and conformable with the issuance plan;

+ The corporate bond issuer has adequate financial capacity for paying the principal and interest of bonds on the maturity date as committed;

+ The corporate bond issuer commits to re-buy the bonds before their maturity in case where the enterprise violates provisions of laws on issuance of corporate bonds, or breaks the plan on issuance of corporate bonds.

- Regarding repurchase of corporate bonds from juridical persons or individuals:

+ Requirements prescribed above;

+ The corporate bonds are under ownership of the juridical persons or the individuals and no dispute, not put as collateral for other obligations and not on the date the principal is due to be paid; and permitted to be transacted.

View more details at Circular No. 22/2016/TT-NHNN of the State Bank of Vietnam, effective from August 15, 2016.

- Thanh Lam -

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