Latest regulations on private placement of government bonds in Vietnam

Latest regulations on private placement of government bonds in Vietnam (Internet image)

1. What is private placement of government bonds under the law in Vietnam?

According to Clause 1, Article 17 of Decree 95/2018/ND-CP (amended by Clause 4, Article 1 of Decree 83/2023/ND-CP), private issuance is the method of directly selling the Government of Vietnam bonds to individual buyers or selecting commercial banks, branches of foreign banks as distribution and payment agents for the bonds (hereinafter referred to as distribution agents) for the buyers.

2. Latest Regulations on private placement of government bonds in Vietnam

According to Article 17 of Decree 95/2018/ND-CP (amended by Clause 4, Article 1 of Decree 83/2023/ND-CP), the regulations on private placement of government bonds are as follows:

- The State Treasury prepares a plan for issuing the Government of Vietnam bonds by private placement method and reports to the Ministry of Finance for approval. The private issuance plan includes the following key contents:

+ Target bond buyers;

+ Estimated issuance volume;

+ Bond term;

+ Estimated interest rate;

+ Estimated issuance time;

+ Estimated form of private issuance (direct issuance by the State Treasury or selection of distribution agent).

- The Ministry of Finance approves the private issuance plan for the Government of Vietnam bonds according to the contents stipulated in Clause 2, Article 17 of Decree 95/2018/ND-CP.

- Based on the private issuance plan approved by the Ministry of Finance, the State Treasury organizes implementation. In case of selecting a distribution agent, the selection of and the contract signing with the distribution agent is carried out according to the provisions of Clauses 5 and 6, Article 17 of Decree 95/2018/ND-CP.

- Conditions to become a distribution agent:

+ Commercial banks, branches of foreign banks legally established and operating in Vietnam, authorized to provide bond issuance agency services in accordance with the Law on Credit Institutions and guidelines from the State Bank of Vietnam;

+ Possess an operational network that meets the needs for distributing and paying the Government of Vietnam bonds;

+ Have a distribution and payment plan for bonds that meets the organizational requirements for each issuance.

- Process for selecting distribution agents:

+ When there is a need to issue bonds by private placement through distribution agents, the State Treasury announces the issuance plan on the websites of the Ministry of Finance, the State Treasury, and the Stock Exchange for commercial banks, branches of foreign banks to register to participate as distribution agents. The announcement includes:

Information  about  the  bonds  expected  to  be  issued:  basic  conditions  and  terms  of  the  bonds  (issue  currency,  term,  face  value,  principal  and  interest  payment  method);  expected  issuance  volume;  expected  issuance  time,  issuance  method;Information  about  the  selection  of  distribution  agents:  conditions  for  distribution  agents  as  stipulated  in  Clause  5,  Article  17  of  Decree  95/2018/ND-CP;  deadline  and  location  for  submitting  the  registration  documents  to  become  a  distribution  agent.

+ Organizations that meet the conditions stipulated in Clause 5, Article 17 of Decree 95/2018/ND-CP and wish to become distribution agents submit sealed registration dossiers directly at the State Treasury or by post service to the address announced by the State Treasury. The registration dossier includes:

A  registration  form  to  become  a  distribution  agent  according  to  Form  No.  06  in  the  Appendix  issued  together  with  Decree  83/2023/ND-CP

Form 06

Plan  for  organizing  bond  distribution  and  payment  with  the  following  basic  contents:  market  forecast  for  bonds  and  distribution  capability;  plan  for  distributing  and  paying  bonds;  proposed  distribution  and  payment  fees;

Documents  proving  the  conditions  to  become  a  distribution  agent,  including:  a  copy  of  the  business  registration  certificate,  the  establishment  and  operation  license,  or  equivalent  legal  documents  (a  copy  issued  from  the  original  register,  a  notarized  copy  by  a  competent  state  agency,  or  a  copy  without  notarization  accompanied  by  the  original  for  comparison);  information  about  the  operational  network  and  infrastructure  to  ensure  the  distribution  and  payment  of  bonds  according  to  the  requirements  of  the  State  Treasury.

+ After the registration dossier submission period, the State Treasury sets up a team to open the sealed dossiers and organizes evaluation, selecting one or several organizations as distribution agents based on conditions and the bond distribution and payment plan.

+ Within a maximum of 15 working days from the end of the registration period to become a distribution agent, the State Treasury notifies the selection results in writing to the registered organizations and announces it on the websites of the Ministry of Finance, the State Treasury, and the Stock Exchange.

+ The State Treasury signs a contract with the distribution agent according to the form guided by the Ministry of Finance. The bond distribution and payment contract serves as the basis for confirming the rights and obligations of the distribution agent and the State Treasury.

+ The distribution agent is responsible for organizing and implementing the bond distribution and payment contents according to the contract signed with the State Treasury.

To Quoc Trinh

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