New regulations on private issuance of government bonds

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

Specifically, Decree No. 83/2023/ND-CP amends and supplements Article 17 on the private placement of government bonds as follows:

Private issuance is a method of directly selling government bonds to individual buyers or selecting commercial banks or foreign bank branches to act as agents for distributing and paying government bonds (distribution agents) to buyers.

The State Treasury develops a plan for issuing government bonds through a private placement and submits it to the Ministry of Finance for approval. The private placement plan includes the following basic contents: Target buyers of the bonds; Expected issuance volume; Bond maturity; Expected interest rate; Expected issuance period; Expected form of private placement (State Treasury issuing directly or selecting a distribution agent).

The Ministry of Finance approves the plan for the private placement of government bonds in accordance with the regulations outlined above.

Based on the private placement plan approved by the Ministry of Finance, the State Treasury will organize the implementation. In the case of selecting a distribution agent, the selection and signing of a contract with the distribution agent will be carried out according to the regulations: Conditions for becoming a distribution agent and the process for selecting a distribution agent.

Conditions for becoming a bond distribution agent

Specifically, the requirements for becoming a distribution agent include:

- These are commercial banks and branches of foreign banks legally established and operating in Vietnam, with the function of providing bond issuance agency services as stipulated in the Law on Credit Institutions and guided by the State Bank of Vietnam ;

- There is an operational network to facilitate the distribution and payment of government bonds;

- There is a plan for organizing the distribution and payment of bonds that meets the requirements of the issuing entity for each issuance.

Distributor selection process

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

Information regarding the planned bond issuance: Basic terms and conditions of the bond (currency of issuance, maturity, face value, method of principal and interest payment); planned volume of bonds to be issued; planned issuance date and method of issuance;

Information regarding the selection of distribution agents: Conditions for distribution agents as stipulated; deadline and location for submitting applications to become distribution agents.

Organizations that meet the eligibility criteria to become distribution agents and wish to do so must submit their sealed applications directly to the State Treasury or send them by mail via postal service to the address announced by the State Treasury.

Amendments to regulations on foreign currency bonds.

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

According to the new regulations, based on the state budget's mobilization needs, the Ministry of Finance, in coordination with the State Bank of Vietnam, will develop a plan for issuing government bonds in the domestic market using freely convertible foreign currency, to be submitted to the Prime Minister for consideration and approval. The plan includes the following basic contents: 1-Purpose of issuance; 2-Volume of issuance; 3-Terms and terms of the bonds: maturity, face value; currency of issuance and payment; interest rate; 4-Method of bond issuance (auction, underwriting, or private placement); 5-Bonuses as stipulated in this Decree and the law on foreign exchange management; 6-Registration, custody, and trading.

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

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