Proposal to amend and supplement regulations on issuance, listing and trading of government debt instruments

Illustrative photo

According to the Draft Decree amending and supplementing Decree 95/2018/ND-CP of the Government on the issuance, registration, deposit, listing and trading of Government debt instruments on the stock market, that is being consulted on by the Ministry of Finance, foreign currency bond is a type of government bond issued in the domestic market in freely convertible foreign currency under the scheme approved by the Prime Minister.

Accordingly, the draft proposes to amend and supplement "Article 17 on Private placement of government bonds" as follows: Private placement is the method that the State Treasury or an authorized unit by the State Treasury uses to directly sell government bonds to each buyer.

The State Treasury develops a plan for issuing government bonds by private placement and report to the Ministry of Finance for approval. The private placement plan includes: bond buyers; expected volume; bond maturities; expected interest rate; expected issuance time and direct trading method of bonds.

On the basis of the private placement plan approved by the Ministry of Finance, the State Treasury issues a decision on bond issuance and organizes the issuance and pays bond principal and interest for each issuance.

For the proposal on amending and supplementing "Article 22 on foreign currency bonds", the Draft Decree stipulates that foreign currency bonds are a type of government bond issued in the domestic market in freely convertible foreign currency under the scheme approved by the Prime Minister.

Based on the needs of the state budget, the Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam to formulate a scheme on issuing government bonds in the domestic market in freely convertible foreign currency and submit it to the Prime Minister for a decision.

The scheme includes the following basic contents: issuance purpose; volume; conditions and terms of bonds; bond maturities and par value of bond; currency for issuance and payment of bonds; interest rate; issuance method; bond buyers: individuals and organizations permitted to do foreign exchange business in accordance with the foreign exchange law; the bond registration and depository and trading. Bonds can only be traded between individuals and organizations licensed to do foreign exchange business and between organizations licensed to do business with each other in accordance with the foreign exchange law.

Pursuant to the scheme on issuance of foreign currency bonds approved by the Prime Minister, the Ministry of Finance shall organize the issuance of foreign currency bonds according to the provisions of Articles 15, 16 and 17 of this draft Decree.

Foreign currency bonds are registered and deposited at the Vietnam Securities Depository and Clearing Corporation in accordance with the provisions of this draft Decree and are traded in accordance with the foreign exchange law.

In addition to the above contents, the draft Decree also proposes to amend and supplement "Article 24: Repurchase of Government debt instruments "and “Article 25: Swap of Government debt instruments”.

Articles 24 and 25 are revised as follows: The Ministry of Finance shall develop a scheme to repurchase debt instruments (or swap debt instruments) before the maturity date and submit it to the Prime Minister for approval before the maturity date or report the scheme before the maturity date in the annual borrowing and debt repayment plan and the 3-year public debt management program.

The contents of the report include: Purpose of repurchase (or swap); Volume and terms and conditions of the debt instrument to be repurchased (or swapped); fund for repurchase (or swap); method of repurchase (or swap); planned date of repurchase and relevant costs.

Repurchase (or swap) of government debt instruments must be openly and transparently made according to market rules.

The volume of Government debt instruments issued for swaps must not exceed the limit  set forth in the borrowing and repayment plan approved by the Prime Minister.

Government debt instruments may be repurchased (or swapped) by either negotiation or bidding. Process of repurchase of government debt instruments in the domestic market shall follow the Minister of Finance’s guidance.

Also, the draft proposes replacing the term "Vietnam Securities Depository Center" with "Vietnam Securities Depository and Clearing Corporation" in Decree 95/2018/ND-CP.