New regulations on private issuance of government bonds

Government bond distribution agents are commercial banks and foreign bank branches legally established and operating in Vietnam, with the function of providing bond issuance agency services according to regulations.

In which, Decree No. 83/2023/ND-CP amends and supplements Article 17 on Private issuance of Government bonds as follows:

Private issuance is a method of directly selling government bonds to each buyer or selecting a commercial bank or foreign bank branch as a distribution and payment agent for government bonds (distribution agent) to the buyer.

The State Treasury develops a plan to issue government bonds in a private manner and reports to the Ministry of Finance for approval. The private issuance plan includes the following basic contents: Bond purchasers; Expected issuance volume; Bond term; Expected interest rate; Expected issuance time; Expected form of private issuance (State Treasury issues directly or selects a distribution agent).

The Ministry of Finance approves the plan to issue private government bonds according to the above provisions.

Based on the private issuance plan approved by the Ministry of Finance, the State Treasury organizes the implementation. In case of selecting a distribution agent, the selection and signing of a contract with the distribution agent shall be carried out in accordance with the provisions: Conditions for becoming a distribution agent and the process of selecting a distribution agent.

Conditions for becoming a bond distributor

Specifically, the conditions for becoming a distributor include:

- Are commercial banks and foreign bank branches legally established and operating in Vietnam, with the function of providing bond issuance agency services according to the provisions of the Law on Credit Institutions and instructions of the State Bank of Vietnam ;

- Have an operating network to meet the distribution and payment of government bonds;

- Have a plan to organize the distribution and payment of bonds that meets the requirements of the issuing organization for each issuance.

Distributor selection process

Decree No. 83/2023/ND-CP clearly stipulates: When there is a need to issue bonds in a private manner through a distribution agent, the State Treasury shall notify the issuance plan on the websites of the Ministry of Finance, the State Treasury and the Stock Exchange so that commercial banks and foreign bank branches can register to participate as distribution agents. The notification content includes:

Information on bonds expected to be issued: Basic terms and conditions of the bonds (currency of issue, term, face value, principal and interest payment method); expected bond volume to be issued; expected issuance time, issuance method;

Information on selecting a distributor: Conditions for distributors according to regulations; deadline and location for receiving application documents to become a distributor.

Organizations that meet the conditions to become distributors and wish to become distributors must submit sealed applications directly to the State Treasury or send them by mail via postal service to the address notified by the State Treasury.

Amendment of regulations on foreign currency bonds

In addition, Decree No. 83/2023/ND-CP also amends and supplements Clauses 2 and 3, Article 22 on foreign currency bonds.

According to the new regulations, based on the mobilization needs of the state budget, the Ministry of Finance shall preside over and coordinate with the State Bank of Vietnam to develop a project to issue government bonds in the domestic market in freely convertible foreign currencies and submit it to the Prime Minister for consideration and approval. The project includes the following basic contents: 1-Purpose of issuance; 2-Issuance volume; 3-Conditions and terms of bonds: term, issuance value; currency of bond issuance and payment; issuance interest rate; 4-Method of bond issuance (bidding, guarantee or private issuance); 5-Subjects to purchase bonds according to the provisions of this Decree and the law on foreign exchange management; 6-Registration, deposit and transaction.

Decree No. 83/2023/ND-CP stipulates that based on the foreign currency bond issuance project approved by the Prime Minister, the Ministry of Finance organizes the issuance of foreign currency bonds.

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