Circular No. 110/2018/TT-BT dated November 15, 2018 of the Ministry of Finance on providing guidance on repurchase and swap of government debt instruments, government-guaranteed bonds and municipal bonds in domestic market

THE MINISTRY OF FINANCE

CircularNo. 110/2018/TT-BTC dated November 15, 2018 of the Ministry of Finance onproviding guidance on repurchase and swap of government debt instruments, government-guaranteed bonds and municipal bonds in domestic market

Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Government’s Decree No. 91/2018/ND-CP dated June 26, 2018 on government guarantee issuance and management;

Pursuant to the Government’s Decree No. 93/2018/ND-CP dated June 30, 2018 providing for provincial-government debt management;

Pursuant to the Government’s Decree No. 94/2018/ND-CP dated June 30, 2018 on public debt management operations;

Pursuant to the Government’s Decree No. 95/2018/ND-CP dated June 30, 2018 providing for issuance, registration, listing and trading of government debt instruments in securities market;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director of the Department of Banking and Financial Institutions;

The Minister of Finance promulgates a Circular providing guidance on repurchase and swap of government debt instruments, government-guaranteed bonds and municipal bonds in domestic market.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation and subjects of application

1.This Circular provides regulations on repurchase and swap of government debt instruments, government-guaranteed bonds which are issued by banks for social policies and municipal bonds in the domestic market; information publishing and responsibility of organizations and individuals involved in the repurchase and swap of debt instruments.

2.Regulated entities:

a) Debt instrument issuers;

b) Stock Exchanges and Vietnam Securities Depository;

c) Debt instrument holders engaged in repurchase or swapping and other organizations and individuals involved in the repurchase and swap of debt instruments.

Article 2. Interpretation of terms

For the purposes of this document, in addition to the terms defined in the Government’s Decree No. 95/2018/ND-CP dated June 30, 2018 and the Government’s Decree No. 94/2018/ND-CP dated June 30, 2018, the terms below are construed as follows:

1.“Debt instruments”refer to:

a) Government debt instruments;

b) Government-guaranteed bonds which are issued by banks for social policies;

c) Municipal bonds issued by Provincial-level People s Committees.

2.“Issuers”refer to:

a) State Treasuries that issue government debt instruments;

b) Provincial-level People s Committees that issue municipal bonds;

c) Banks for social policies that issue government-guaranteed bonds.

3.“Debt instrument holder”refers to the owner of the debt instrument.

4.“Nominal interest rate”refers to the annual interest rate, expressed as percentage (%) to par value that the issuer shall pay debt instrument holders under terms and conditions of the debt instrument.

5.“Term to maturity”refers to the actual time between when the debt instrument is repurchased or swapped and when it matures.

6.“Repurchase or swap organization date”refers to:

a) The date on which the issuer conducts negotiation and enters into an agreement on repurchase or swap of debt instrument according to the agreed method; or

b) The date on which the issuer organizes bidding for repurchase or swap of debt instrument according to the approved bidding method.

7.“Debt instrument repurchase”refers to the act of the issuer buying back the debt instrument before its maturity date.

8.“Debt instrument resale”refers to the act of the debt instrument holder selling back the debt instrument to the issuer before its maturity date.

9.“Repurchase date”refers to the date on which the issuer makes payment for the repurchased debt instrument to the debt instrument holder.

10.“Repurchase interest rate”refers to the bid-winning interest rate or the interest rate which is decided by the issuer according to the bidding result or the result of the related parties’ negotiation on the debt instrument repurchase as regulated herein.

11.“Debt instrument swap”means a portfolio management technique in which debt instruments of two different codes of the same issuer are bought and sold simultaneously.

12.“"Sold debt instrument”in a swaprefers to the outstanding debt instrument which is selected to swap with another debt instrument (called as “purchased debt instrument”).

13.“Purchased debt instrument”in a swap refers to the debt instrument which is issued in the first or additional issue, and used to swap outstanding debt instrument (which is the sold debt instrument).

14.“Swap date”refers to the date on which the new debt instrument (or the purchased debt instrument) is issued to swap the outstanding debt instrument (or the sold debt instrument).

15.“Swap interest rate”refers to the discount interest rate used as the basis for determining the prices of the sold debt instrument and the purchased debt instrument.

Article 3. Repurchase and swap interest rates

1.The Ministry of Finance shall decide the brackets of repurchase interest rates and swap interest rates in each period or for each specific repurchase or swap.

2.Based on the brackets of repurchase interest rates and swap interest rates specified in Clause 1 of this Article, the issuer shall decide the repurchase or swap interest rate for each debt instrument repurchase or swap.

Article 4. Rules of debt instrument repurchase and swap

1.The debt instrument repurchase or swap must be carried out according to the scheme or plan approved by a competent authority in accordance with applicable regulations on issuance of debt instruments. To be specific:

a) Government debt instruments shall be repurchased or swapped according to the scheme for repurchase or swap of debt instruments approved by the Prime Minister as per Clause 1 Article 24 or Clause 1 Article 25 of the Decree No. 95/2018/ND-CP;

b) Government-guaranteed bonds shall be repurchased or swapped according to the plan for repurchase or swap of government-guaranteed bonds approved by the Prime Minister as per Clause 7 Article 49 of the Government’s Decree No. 91/2018/ND-CP dated June 26, 2018;

c) Municipal bonds shall be repurchased or swapped according to the plan for repurchase or swap of municipal bonds approved by the Provincial People’s Council as per Clause 6 or Clause 7 Article 8 of the Government’s Decree No. 93/2018/ND-CP dated June 30, 2018.

2.The debt instrument repurchase or swap must be carried out in conformity with the market prices at the repurchase or swap date, openly and transparently.

3.The debt instrument repurchase or swap must adhere to regulations herein and relevant laws.

Article 5. Debt instrument repurchase and swap methods

1.The debt instrument repurchase or swap shall be carried out by adopting one of the following methods:

a) Carry out direct negotiation with debt instrument holders;

b) Organize bidding through the Stock Exchanges. The State Treasury is entitled to directly organize the bidding for repurchase or swap of government debt instruments according to the Ministry of Finance’s regulations.

2.The issuer shall decide the debt instrument repurchase or swap method according to the scheme or plan approved by a competent authority and publicly announce the selected repurchase or swap method before the repurchase or swap.

Article 6. Conditions of debt instruments repurchased, sold and purchased in swaps

1.The debt instrument to be repurchased must:

a) Not reach maturity; and

b) Not be bound by any secured transactions from the date of application for resale of the debt instrument according to the direct negotiation method or from the date on which bidding for debt instrument repurchase is organized.

2.The debt instrument to be purchased in a swap must:

a) Have terms and conditions same as those of the outstanding debt instrument if it is additionally issued; or

b) Have terms and conditions decided by the issuer if it is a new debt instrument issued for the first time.

3.The debt instrument to be sold in a swap must meet the conditions specified in Clause 1 of this Article.

Chapter II

DEBT INSTRUMENT REPURCHASE

Section 1. REPURCHASE OF DEBT INSTRUMENT BY NEGOTIATION

Article 7. Repurchase of debt instruments registered and deposited at Vietnam Securities Depository

1.At least five (05) business days before the repurchase organization date, the issuer must publish information concerning the debt instrument repurchase on its website, the websites of the Stock Exchange and the Vietnam Securities Depository. Information to be published includes:

a) Terms of the debt instrument to be repurchased, including: code, code’s scale, initial issue date, maturity date, nominal interest rate, and method of principal and interest payment;

b) The quantity of the debt instrument to be repurchased, sorted by the debt instrument s code;

c) The deadline for submission of application for debt instrument resale. This application submission deadline must be at least 03 days before the repurchase organization date;

d) The date on which the Vietnam Securities Depository blocks the debt instrument on the depository account of the debt instrument holder who applies for the debt instrument resale. This date must be at least 02 days before the repurchase organization date;

dd) The planned repurchase organization date and repurchase date.

2.Based on the information concerning the debt instrument repurchase published according to Clause 1 of this Article, the debt instrument holder or its authorized organization shall submit an application for debt instrument resale, which is made according to the form provided in the Appendix 1 enclosed herewith, to the issuer.Applications which are submitted after the required application submission deadline shall be invalid.

3.After the deadline for submission of application for debt instrument resale, based on the received applications for debt instrument resale, the issuer shall request the Vietnam Securities Depository to block total debt instruments to be repurchased according to the form provided in the Appendix 2 enclosed herewith. The Vietnam Securities Depository shall block debt instruments to be sold back as registered by debt instrument holders and inform the issuer of such blockage.

4.Based on the received applications for debt instrument resale and the notification of blockage of debt instruments given by the Vietnam Securities Depository, on the repurchase organization date, the issuer shall carry out negotiations and reach an agreement on terms of debt instrument repurchase with debt instrument holders or their authorized organizations. Contents to be negotiated include:

a) The quantity of debt instrument to be repurchased, sorted by code;

b) The repurchase interest rate of each debt instrument s code to be repurchased as regulated in Article 3 hereof;

c) Repurchase date;

d) The price of a repurchased debt instrument determined according to Article 13 hereof;

dd) Total debt instrument repurchase amount which is equal to the quantity of repurchased debt instruments multiplied by the price of a debt instrument.

5.Based on the negotiation result, on the repurchase organization date, the issuer and the debt instrument holder or its authorized organization shall enter into an agreement on debt instrument repurchase, which is made according to the form provided in the Appendix 3 enclosed herewith.

6.Within one business day after the repurchase organization date, the issuer must provide the Vietnam Securities Depository and the Stock Exchange with the notification of negotiation results made according to the form provided in the Appendix 4 enclosed herewith. Based on the issuer’s notification, the Vietnam Securities Depository shall keep blockage of debt instruments repurchased according to the signed repurchase agreements and stop blocking debt instruments which are not repurchased.

7.On the repurchase date as specified in the agreement signed with the debt instrument holder, the issuer shall make payment for the repurchased debt instrument to the debt instrument holder according to Clause 1 Article 22 hereof.

8.The cancellation of listing, registration and depositing of repurchased debt instruments shall be made according to Article 25 hereof.

9.Upon the completion of the debt instrument repurchase, the issuer shall publish the repurchase results according to Article 27 hereof.

Article 8. Repurchase of debt instruments which are not registered or deposited at Vietnam Securities Depository

1.Based on the scheme or plan for debt instrument repurchase approved by a competent authority, the issuer shall carry out negotiations and reach agreements on repurchase terms with debt instrument holders or their authorized organizations.Contents to be negotiated include:

a) The quantity of debt instruments to be repurchased;

b) The repurchase interest rate as regulated in Article 3 hereof;

c) The repurchase date;

d) The price of a repurchased debt instrument;

dd) Total debt instrument repurchase amount.

2.Based on the negotiation result, the issuer and the debt instrument holder or its authorized organization shall enter into an agreement on debt instrument repurchase, which is made according to the form provided in the Appendix 3 enclosed herewith.

3.On the repurchase date as specified in the agreement signed with the debt instrument holder, the issuer shall make payment for the repurchased debt instrument to the debt instrument holder according to Clause 2 Article 22 hereof.

Section 2. REPURCHASE OF DEBT INSTRUMENT THROUGH BIDDING

Article 9. Bidding rules and form, and method of determining bidding result

1.Bidding rules

a) Rights and obligations amongst market makers must be completely impartial in accordance with applicable laws;

b) The market maker’s bid information must be kept secret.

2.Bidding form:

The bidding for debt instrument repurchase shall be conducted by adopting one of the following forms:

a) Competitive bid; or

b) Combination of competitive bid and non-competitive bid.

If the bidding is held in the form of combination of competitive bid and non-competitive bid, total debt instruments to be repurchased from bidders of non-competitive bid shall not exceed 30% of the maximum quantity of debt instruments to be repurchased through bidding.

3.Method of determining bidding result

The bidding result shall be determined by adopting one of the following methods:

a) Fixed-rate tender; or

b) Variable-rate tender.

4.The issuer shall make a specific notification of the bidding form and method of determining bidding result before each debt instrument repurchase through bidding.

Article 10. Bidders

1.Bidders are market makers in the government debt instrument market annually announced by the Ministry of Finance.

2.Market makers may sell back their own debt instruments or debt instruments of their customers who are debt instrument holders according to their authorization.

Article 11. Bidding steps for debt instrument repurchase

1.At least four (04) business days before the repurchase organization date, the issuer shall publish the repurchase-related information on its website and request the Stock Exchange to inform the market markers of the repurchase and publish the repurchase-related information on its website. Information to be informed includes:

a) Code of the debt instrument to be repurchased;

b) The code’s scale, initial issue date, maturity date, nominal interest rate, and method of debt instrument principal and interest payment;

c) The quantity of the debt instrument to be repurchased, sorted by the debt instrument s code;

d) The repurchase organization date and the repurchase date;

dd) Bidding form and method of determining the bidding result.

2.Not later than 10:30 AM on the repurchase organization date, market makers must provide the Stock Exchange with bid information by using the bid form provided by the Stock Exchange. Each market maker or his/her customer participating in the competitive bid is allowed to submit a maximum of five (05) bid rates on a bid form for each code of debt instrument to be repurchased.Each bid rate is submitted for both the interest rate offered (rounded to 2 decimal places) and the corresponding quantity of debt instrument to be sold out.If a market maker participates in bidding for resale of debt instruments for his/her customers, he/she must provide sufficient information about such customers such as the customer’s name, interest rate and corresponding quantity of debt instrument to be sold out by each customer.

3.Within fifteen (15) minutes after the deadline for bid submission mentioned in Clause 2 of this Article, the Stock Exchange shall open the bids, prepare and submit a consolidated report on bids to the issuer.

4.Based on the consolidated report on bids submitted by the Stock Exchange, the issuer shall determine the repurchase interest rate of each code of debt instrument to be bought back, and inform it to the Stock Exchange for determining the bidding result according to Article 12 hereof.

5.Upon the completion of the bidding for repurchase operation, the Stock Exchange shall electronically send bidding results to market makers through the electronic bidding system, and notify the issuer and the Vietnam Securities Depository of bidding result according to the form provided in the Appendix 5 enclosed herewith.

6.Based on the Stock Exchange’s notification, Vietnam Securities Depository shall block debt instruments of winning bidders.

7.The issuer shall make payment for the repurchased debt instruments on the repurchase date according to Article 22 hereof.

8.The cancellation of listing, registration and depositing of repurchased debt instruments shall be made according to Article 25 hereof.

9.Upon the completion of the debt instrument repurchase, relevant parties shall publicly announce the repurchase-related information according to Article 27 hereof.

Article 12. Bidding result determination

1.Bid-winning interest rate, corresponding quantity and repurchase price of a debt instrument shall be determined according to:

a) The quantity of debt instruments to be repurchased through bidding;

b) Bid interest rate and quantity of debt instrument to be sold out;

c) The minimum repurchase interest rate as regulated in Article 3 hereof.

2.Method of determining bid-winning interest rate:

a) For debt instrument repurchase through fixed-rate tender: The bid-winning interest rate is the lowest bid interest rate which is commonly applied to all market makers (for both competitive and non-competitive bids), considered in the descending interest rate order, and must satisfy the following conditions:

-It shall not be lower than the minimum repurchase interest rate announced by the Ministry of Finance; and

-The sum of debt instruments to be sold out sequentially at up to the bid-winning interest rate shall not exceed the maximum quantity of debt instruments being repurchased as announced by the issuer.

b) For debt instrument repurchase through variable-rate tender:

-The bid-winning interest rate of a participant in the competitive bid is the bid interest rate which is submitted that participant, considered in the ascending interest rate order, and must satisfy the following conditions:

+ The weighted average of bid-winning interest rates shall not be lower than the minimum repurchase interest rate announced by the Ministry of Finance;

+ The sum of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate shall not exceed the maximum quantity of debt instruments being repurchased through bidding.

-The bid-winning interest rate applied to all bidders of non-competitive bid is the weighted average of bid-winning interest rates, which is rounded off to two (02) decimal places.

3.Method of determining the quantity of debt instrument bought back from each successful bidder:

a) Debt instrument being repurchased through competitive bid:

The quantity of debt instrument bought back from each successful bidder in the competitive bid is equal to the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate exceeds the maximum quantity of debt instruments to be repurchased through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments bought back from bidders with higher bid interest rates shall be repurchased from bidders submitting the lowest bid interest rate at a percentage in proportion to their quantities of debt instruments to be sold out as stated in their bid forms. The quantity of debt instruments to be bought back from a successful bidder shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be bought back from the bidder firstly offering the lowest bid interest rate. If total amount of debt instrument to be repurchased from this bidder exceeds the quantity of debt instrument to be sold out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer buys back enough debt instruments as announced.

b) Debt instrument being repurchased in the form of combination of competitive bid and non-competitive bid:

-The quantity of debt instrument bought back from each successful bidder in the competitive bid is equal to the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate exceeds the maximum quantity of debt instruments to be repurchased through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments to be bought back from bidders of non-competitive bid and from bidders with higher bid interest rates shall be repurchased from bidders submitting the lowest bid interest rate at a percentage in proportion to their quantities of debt instruments to be sold out as stated in their bid forms. The quantity of debt instruments to be bought back from each successful bidder shall be rounded off to the nearest ten thousand.The odd amount of debt instrument shall be bought back from the bidder firstly offering the lowest bid interest rate. If total amount of debt instrument to be repurchased from this bidder exceeds the quantity of debt instrument to be sold out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer buys back enough debt instruments as announced after subtracting the amount of debt instruments to be bought back from bidders of non-competitive bid;

-The quantity of debt instrument bought back from each successful bidder of non-competitive bid is equal to the debt instrument quantity stated on the bid form submitted by that bidder. If the sum of debt instruments to be sold out through the non-competitive bid exceeds the limit prescribed in Point b Clause 2 Article 9 hereof, the amount of debt instrument that the issuer buys back from each bidder of non-competitive bid shall be in proportion with the quantity of debt instrument stated in the bid form submitted by that bidder. The quantity of debt instruments to be bought back from each bidder shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be bought back from the bidder firstly offering the bid in the non-competitive bid. If total amount of debt instrument to be repurchased from this bidder exceeds the quantity of debt instrument to be sold out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer buys back enough debt instruments through non-competitive bid as announced;

-If none of bidders of competitive bid is successful, the issuer shall not buy back debt instruments from bidders of non-competitive bid.

Examples of determination of the bid-winning interest rate and repurchase of debt instruments from successful bidders are available in the Appendix 6 enclosed herewith.

4.Total amount paid for repurchased debt instruments is equal to the quantity of repurchased debt instruments multiplied by the repurchase price of a debt instrument.

5.The repurchase price of a debt instrument is determined according to Article 13 hereof.

Article 13. Repurchase price of a debt instrument

1.The repurchase price of a debt instrument which makes no periodic interest payments:

a) T-bills:

Where:

G = The price of a T-bill (rounded off to the nearest Dong);

MG = Face value of T-bill;

L_t= Discount rate of T-bill to be repurchased (%/365 days);

n = Actual days between the repurchase date and the maturity date of T-bill.

b) Other debt instruments which make no periodic interest payments and have a term of at least 01 year commencing from the issue date:

Where:

GG = The repurchase price of a debt instrument (rounded off to the nearest Dong);

MG = Face value of debt instrument;

a = Days, including the repurchase date, till the next interest payment date as assumed;

E = Total days of an assumed interest payment period in which the debt instrument is repurchased;

t = Number of assumed interest payments between the repurchase date and the maturity date;

L_t= Repurchase interest rate (%/year).

2. The repurchase price of a debt instrument which has a fixed nominal interest rate and interest payments made periodically at equal intervals:

a) If the repurchase date falls on or before the record date of the next interest payment period, the repurchase price of a debt instrument is calculated by adopting the following formula:

b) If the repurchase date falls after the record date of the next interest payment period, the repurchase price of a debt instrument is calculated by adopting the following formula:

Where:

GG = The repurchase price of a debt instrument (rounded off to the nearest Dong);

MG = Face value of debt instrument;

L_c= Nominal interest rate (%/year);

k = Number of periodic interest payments during a year;

d = Actual days between the repurchase date and the next interest payment date;

E = Actual days of an interest payment period in which the debt instrument is bought back;

t = Number of interest payments between the repurchase date and the maturity date of the debt instrument;

L_t= Repurchase interest rate (%/year).

3.The repurchase price of a debt instrument which has a fixed nominal interest rate and interest payments made periodically but the first interest payment period is shorter or longer than the next ones:

a) If the repurchase date falls before or on the record date for receiving debt instrument interest in the first interest payment period:

-If the sum of actual days between the repurchase date and the interest payment date of the first interest payment period is shorter than an ordinary interest payment period, the repurchase price of a debt instrument is calculated by adopting the following formula:

- If the sum of actual days between the repurchase date and the interest payment date of the first interest payment period is longer than or equal to an ordinary interest payment period, the repurchase price of a debt instrument is calculated by adopting the following formula:

GG = The repurchase price of a debt instrument (rounded off to the nearest Dong);

GL₁= Interest on a debt instrument paid in the first interest payment period according to terms of a newly issued debt instrument;

MG = Face value of debt instrument;

L_{t =}Repurchase interest rate (%/year);

L_c= Nominal interest rate (%/year);

k = Number of periodic interest payments during a year;

a1 = Actual days between the repurchase date and the first interest payment date according to terms of a newly issued debt instrument;

a2 = Actual days between the repurchase date and the ordinary interest payment date as assumed;

E = Total days of an ordinary interest payment period according to terms of a newly issued debt instrument;

t = Number of interest payments between the repurchase date and the maturity date of the debt instrument.

b) If the repurchase date falls after the record date for receiving debt instrument interest in the first interest payment period, the repurchase price of a debt instrument shall be determined by adopting the formula which is employed to calculate the repurchase price of debt instrument with equal interest payment periods regulated in Clause 2 of this Article.

4.If the nominal interest rate of a debt instrument is floating interest rate, the Ministry of Finance shall provide guidance on the method of determining interest rate and repurchase price for each repurchase operation.

Chapter III

DEBT INSTRUMENT SWAP

Section 1. SWAP OF DEBT INSTRUMENT BY NEGOTIATION

Article 14. Swap of debt instruments registered and deposited at Vietnam Securities Depository

1.At least five (05) business days before the swap organization date, the issuer must publish information concerning the debt instrument swap on its website, the websites of the Stock Exchange and the Vietnam Securities Depository. Information to be informed includes:

a) Terms and conditions of debt instruments to be sold out in a swap, including listed code, issue date, maturity date, nominal interest rate, and principal and interest payment method; b) Terms and conditions of debt instruments to be purchased in a swap:

-Terms and conditions of an additionally issued debt instrument include: Listing code, issue date, maturity date, nominal interest rate, and principal and interest payment method;

-Terms and conditions of a newly issued debt instrument include: Planned listing code, issue date and term, rules for determining nominal interest rate, and interest payment method.

c) The planned quantity of sold debt instruments;

d) The deadline for submission of application for debt instrument swap. This application submission deadline must be at least three (03) days before the swap organization date;

dd) The date on which the Vietnam Securities Depository blocks the debt instrument on the depository account of the debt instrument holder who applies for debt instrument swap. This date must be at least two (02) days before the swap organization date;

e) The planned swap organization date and swap date.

2.Based on the published information concerning the swap, debt instrument holders wishing to engage in the swap shall provide the issuer with applications for debt instrument swap made according to the form provided in the Appendix 7 enclosed herewith. Applications which are submitted after the application submission deadline are invalid.

3.After the application submission deadline, based on the received applications for debt instrument swap, the issuer shall request the Vietnam Securities Depository to block total debt instruments to be swapped on depository accounts of holders according to the form provided in the Appendix 8 enclosed herewith. Vietnam Securities Depository shall block the amount of debt instruments to be swapped as registered by each debt instrument holder, and inform the issuer and the depository member where the holder s depository account is opened of such blockage.

4.Based on the received applications for debt instrument swap, terms and conditions of swapped debt instruments, the issuer shall conduct negotiations with debt instrument holders on swap contents as regulated herein. Contents to be negotiated include:

a) Determination of the discount rates of the sold debt instrument and the purchased debt instrument according to Article 3 hereof;

b) Determination of the swap date, and terms to maturity of swapped debt instruments;

c) Determination of the price of the sold debt instrument and the price of the purchased debt instrument according to Clause 1 and Clause 2 Article 21 hereof;

d) Determination of the quantity of the sold debt instruments which shall not exceed the quantity of debt instruments registered by holders and blocked by Vietnam Securities Depository; determination of the quantity of debt instruments to be sold out to holders according to Point b Clause 3 Article 21 hereof.

5.If the issuer and the debt instrument holder reach an agreement on the swap, they shall enter into a swap agreement according to the form provided in the Appendix 9 enclosed herewith.

6.Based on the signed swap agreement, the issuer shall notify the Stock Exchange and the Vietnam Securities Depository of the swap result by using the form provided in the Appendix 10 enclosed herewith in order to carry out the registration, depositing and listing of purchased debt instruments and cancel the registration, depositing and listing of sold debt instruments as well as stop blocking debt instruments which do not involve in the swap because the issuer disagrees with the holder about the swap.

7.Upon the completion of the debt instrument swap, the issuer shall publish related information according to Article 28 hereof.

Article 15. Swap of debt instruments which are not registered or deposited at Vietnam Securities Depository

1.Based on the swap scheme or plan approved by a competent authority, the issuer shall conduct negotiations with debt instrument holders on the swap contents as regulated herein. Contents of a negotiation include:

a) Terms and conditions of the sold debt instrument and the purchased debt instrument;

b) Discount rates of the sold debt instrument and the purchased debt instrument according to Article 3 hereof;

c) The swap date, and terms to maturity of debt instruments involved in the swap;

d) Prices of the sold debt instrument and the purchased debt instrument determined according to Clause 1 and Clause 2 Article 21 hereof;

dd) The quantity of sold debt instruments and the quantity of debt instruments to be sold to holders of the sold debt instruments according to Point b Clause 3 Article 21 hereof.

2.If the issuer and the debt instrument holder reach an agreement on the swap, they shall enter into a swap agreement according to the form provided in the Appendix 9 enclosed herewith.

Section 2. SWAP OF DEBT INSTRUMENTS THROUGH BIDDING

Article 16. Bidding rules and form, and method of determining bidding result

1.Bidding rules:

a) Rights and obligations amongst market makers must be completely impartial in accordance with applicable laws;

b) The market maker’s bid information must be kept confidential;

c) Based on the swap interest rate bracket announced by the Ministry of Finance and interest rates of debt instruments of similar terms in the market, the issuer shall announce the interest rate/ price of the sold debt instrument in the swap and organize the interest-rate/ price bidding for the purchased debt instrument or announce the interest rate/ price of the purchased debt instrument and organize the interest-rate/ price bidding for the sold debt instrument.

2.Bidding form:

The bidding for debt instrument swap shall be conducted by adopting one of the following forms:

a) Competitive bid; or

b) Combination of competitive bid and non-competitive bid.

If the bidding is held in the form of combination of competitive bid and non-competitive bid, total debt instruments to be swapped out as registered by bidders of non-competitive bid shall not exceed 30% of the maximum quantity of debt instruments to be swapped out by the issuer through the bidding session.

3.Method of determining bidding result:

The bidding result shall be determined by adopting one of the following methods:

a) Fixed-rate tender; or

b) Variable-rate tender.

4.The issuer shall make a specific notification of the bidding form and method of determining bidding result before each debt instrument swap through bidding.

Article 17. Bidders for debt instrument swap

1.Bidders are market makers in the government debt instrument market annually announced by the Ministry of Finance.

2.Market makers may participate in the bidding for swapping out their own debt instruments or debt instruments of their customers with their authorization.

Article 18. Debt instrument swap steps

1.At least four (04) business days before the swap organization date, the issuer shall publish the swap-related information on its website and request the Stock Exchange to inform all market markers of the swap and publish the swap-related information on its website. Information to be informed includes:

a) Terms and conditions of debt instruments to be sold out and purchased in a swap, including: Listing code, initial issue date, maturity date, nominal interest rate, and method of principal and interest payment;

b) The planned quantity of the sold or purchased debt instrument;

c) The swap organization date and the swap date;

d) Bidding form and method of determining the bidding result.

2.Not later than 09:30 AM on the swap organization date, the issuer shall announce the interest rate/price of the sold debt instrument (for holding the interest-rate bidding for the purchased debt instrument) or the interest rate/price of the purchased debt instrument (for holding the interest-rate bidding for the sold debt instrument) through the bidding system of the Stock Exchange and on its website.

3.Not later than 10:30 AM on the swap organization date, market makers must provide the Stock Exchange with bid information, including the interest rate of the purchased or sold debt instrument, by using the bid form provided by the Stock Exchange. Each market maker or his/her customer participating in the competitive bid is allowed to submit a maximum of five (05) bid rates on a bid form for each code of debt instrument to be swapped out through bidding. Each bid rate is submitted for both the interest rate offered (rounded to 2 decimal places) and the corresponding quantity of debt instrument to be swapped out. If a market maker participates in bidding for swap of debt instruments for his/her customers, he/she must provide sufficient information about such customers such as the customer’s name, interest rate and corresponding quantity of debt instrument to be swapped out by each customer.

4.Within fifteen (15) minutes after the bid submission deadline mentioned in Clause 3 of this Article, the Stock Exchange shall open the bids, prepare and submit a consolidated report on bids to the issuer.

5.Based on the consolidated report on bids submitted by the Stock Exchange, the issuer shall determine the interest rate of each code of debt instrument to be purchased or sold, and inform it to the Stock Exchange for determining the bidding result for the purchased debt instrument according to Article 19 hereof or the bidding result for the sold debt instrument according to Article 20 hereof.

6.Upon the completion of the bidding for debt instrument swap, the Stock Exchange shall electronically send the bidding result to market makers through the electronic bidding system, and notify the issuer and the Vietnam Securities Depository of bidding result according to the form provided in the Appendix 11 enclosed herewith. From the receipt of the Stock Exchange’s notification, the Vietnam Securities Depository shall block debt instruments to be swapped out of successful bidders.

7.On the swap date, based on the bidding result, the Stock Exchange and the Vietnam Securities Depository shall carry out procedures for registration, depositing and listing of purchased debt instruments, and cancellation of registration, depositing and listing of sold debt instruments according to Article 26 hereof.

8.Upon the completion of the debt instrument swap, the issuer shall publish the swap-related information in accordance with Article 28 hereof.

Article 19. Determination of bidding result for purchased debt instrument

In case the issuer announces the interest rate/price of the sold debt instrument and holds the interest-rate bidding for the purchased debt instrument, the bidding result for the purchased debt instrument shall be determined as follows:

1.Bid-winning interest rate, corresponding quantity and price of the purchased debt instrument shall be determined according to:

a) The quantity of debt instruments to be purchased through bidding;

b) The interest rate and quantity of debt instruments to be sold out through bidding of bidders;

c) The swap interest rate bracket as regulated in Article 3 hereof.

2.Method of determining bid-winning interest rate:

a) For fixed-rate tender: The bid-winning interest rate is the highest bid interest rate which is commonly applied to all market makers (for both competitive and non-competitive bids), considered in the ascending interest rate order, and must satisfy the following conditions:

-It must be within the swap interest rate bracket announced by the Ministry of Finance; and

-The sum of debt instruments to be purchased sequentially at up to the bid-winning interest rate shall not exceed the maximum quantity of the purchased debt instruments as announced by the issuer.

b) For variable-rate tender:

-The bid-winning interest rate of a participant in the competitive bid is the bid interest rate which is submitted that participant, considered in the ascending interest rate order, and must satisfy the following conditions:

+ The weighted average of bid-winning interest rates shall not be higher than the maximum swap interest rate announced by the Ministry of Finance;

+ The sum of debt instruments to be purchased sequentially at up to the highest bid-winning interest rate shall not exceed the maximum quantity of purchased debt instruments through bidding.

-The bid-winning interest rate applied to all bidders of non-competitive bid is the weighted average of bid-winning interest rates, which is rounded off to two (02) decimal places.

3.Method of determining the quantity of debt instrument purchased from each successful bidder:

a) Debt instrument being purchased through the competitive bid:

The quantity of debt instrument being swapped with each successful bidder in the competitive bid is the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be swapped out sequentially at up to the highest bid-winning interest rate exceeds the maximum quantity of purchased debt instruments through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments swapped out with bidders offering lower bid interest rates shall be purchased from bidders submitting the highest bid interest rate at a percentage in proportion to their quantities of debt instruments to be swapped out as stated in their bid forms. The quantity of debt instruments to be swapped with each successful bidder shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be swapped with the bidder firstly offering the bid which is the bid-winning interest rate. If total amount of debt instruments to be swapped with this bidder exceeds the quantity of debt instruments to be swapped out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer purchases enough debt instruments as announced before bidding.

b) Debt instrument being purchased in the form of combination of competitive bid and non-competitive bid:

-The quantity of debt instrument being swapped with each successful bidder in the competitive bid is the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be swapped out sequentially at up to the highest bid-winning interest rate exceeds the maximum quantity of purchased debt instruments through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments to be swapped out by bidders of non-competitive bid and by bidders with lower bid interest rates shall be purchased from bidders submitting the highest bid interest rate at a percentage in proportion to their quantities of debt instruments to be swapped out as stated in their bid forms. The quantity of debt instruments to be purchased from each successful bidder shall be rounded off to the nearest ten thousand.The odd amount of debt instruments shall be purchased from the bidder firstly offering the bid which the bid-winning interest rate. If total amount of debt instruments to be purchased from this bidder exceeds the quantity of debt instruments to be swapped out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer purchases enough debt instruments as announced before bidding after subtracting the amount of debt instruments to be purchased from bidders of non-competitive bid;

-The quantity of debt instrument being purchased from each successful bidder of non-competitive bid is the one stated on the bid form submitted by that bidder. If the sum of debt instruments to be purchased from bidders of non-competitive bid exceeds the limit prescribed in Point b Clause 2 Article 16 hereof, the amount of debt instrument that the issuer purchases from each bidder of non-competitive bid shall be in proportion with the quantity of debt instrument to be swapped out as stated in the bid form submitted by that bidder. The quantity of the purchased debt instrument in this case shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be purchased from the bidder firstly offering the bid in the non-competitive bid. If total amount of debt instrument to be purchased from this bidder exceeds the quantity of debt instrument to be swapped out as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the issuer purchases enough debt instruments through the non-competitive bid as announced;

-If none of bidders of competitive bid is successful, debt instruments of bidders of non-competitive bid shall not be swapped out.

Examples of the determination of bid-winning interest rate/nominal interest rate and the quantity of debt instruments purchased from each successful bidder are available in the Appendix 12 enclosed herewith.

Article 20. Determination of bidding result for sold debt instrument

In case the issuer announces the interest rate/price of the purchased debt instrument and holds the interest-rate bidding for the sold debt instrument, the bidding result for the sold debt instrument shall be determined as follows:

1.Bid-winning interest rate, corresponding quantity and price of a sold debt instrument shall be determined according to:

a) The quantity of debt instruments to be sold out through bidding;

b) The interest rate and quantity of debt instruments to be purchased by bidders;

c) The swap interest rate bracket as regulated in Article 3 hereof.

2.Method of determining bid-winning interest rate:

a) For fixed-rate tender: The bid-winning interest rate is the lowest bid interest rate which is commonly applied to all bidders (for both competitive and non-competitive bids), considered in the descending interest rate order, and must satisfy the following conditions:

-It must be within the swap interest rate bracket announced by the Ministry of Finance; and

-The sum of debt instruments to be sold out sequentially at up to the bid-winning interest rate shall not exceed the maximum quantity of the sold debt instruments as announced by the issuer.

b) For variable-rate tender:

-The bid-winning interest rate of a participant in the competitive bid is the bid interest rate which is submitted that participant, considered in the descending interest rate order, and must satisfy the following conditions:

+ The weighted average of bid-winning interest rates shall not be lower than the minimum swap interest rate announced by the Ministry of Finance;

+ The sum of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate shall not exceed the maximum quantity of sold debt instruments through bidding.

-The bid-winning interest rate applied to all bidders of non-competitive bid is the weighted average of bid-winning interest rates, which is rounded off to two (02) decimal places.

3.Method of determining the quantity of debt instruments sold to each successful bidder:

a) Debt instrument being sold out through the competitive bid:

The quantity of debt instrument being sold to each successful bidder in the competitive bid is the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate exceeds the maximum quantity of sold debt instruments through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments sold to bidders with higher bid interest rates shall be sold to bidders submitting the lowest bid-winning interest rate in proportion to their quantities of debt instruments to be swapped as stated in their bid forms. The quantity of debt instruments to be sold to each successful bidder shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be sold to the bidder firstly offering the bid which is the bid-winning interest rate. If total amount of debt instruments sold to this bidder exceeds the quantity of debt instruments stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the announced quantity of sold debt instruments is sold out.

b) Debt instrument being sold in the form of combination of competitive bid and non-competitive bid:

-The quantity of debt instrument being sold to each successful bidder in the competitive bid is the debt instrument quantity stated on the bid form submitted by that bidder. If the accrued quantity of debt instruments to be sold out sequentially at up to the lowest bid-winning interest rate exceeds the maximum quantity of sold debt instruments through bidding, the amount of debt instruments that remains after subtracting the amount of debt instruments to be sold to bidders of non-competitive bid and bidders with higher bid interest rates shall be sold to bidders submitting the lowest bid interest rate at a percentage in proportion to their quantities of debt instruments to be swapped as stated in their bid forms. The quantity of debt instruments to be sold to each successful bidder shall be rounded off to the nearest ten thousand.The odd amount of debt instruments shall be sold to the bidder firstly offering the bid which is the bid-winning interest rate. If total amount of debt instruments to be sold to this bidder exceeds the quantity of debt instruments to be swapped as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the announced quantity of sold debt instruments is sold out after subtracting the amount of debt instruments to be sold to bidders of non-competitive bid;

-The quantity of debt instrument being sold to each successful bidder of non-competitive bid is the debt instrument quantity stated on the bid form submitted by that bidder. If the sum of debt instruments to be sold to bidders of non-competitive bid exceeds the limit prescribed in Point b Clause 2 Article 16 hereof, the amount of debt instrument sold to each bidder of non-competitive bid shall be in proportion with the quantity of debt instrument to be swapped as stated in the bid form submitted by that bidder. The quantity of debt instrument sold to each bidder shall be rounded off to the nearest ten thousand. The odd amount of debt instrument shall be sold to the bidder firstly offering the bid in the non-competitive bid. If total amount of debt instrument to be sold to this bidder exceeds the quantity of debt instrument to be swapped as stated in his/her bid form, bidders successively submitting the bids will continue to be accepted until the announced quantity of sold debt instrument through non-competitive bid is sold out.

-If none of bidders of competitive bid is successful, debt instruments shall not be sold to bidders of non-competitive bid.

Examples of the determination of bid-winning interest rate and the quantity of debt instruments sold to each successful bidder are available in the Appendix 13 enclosed herewith.

Article 21. Determination of price and quality of purchased and sold debt instruments in a swap

1.The price of a sold debt instrument is determined as follows:

a) Price of a sold debt instrument which makes no periodic interest payments:

-T-bills:

Where:

G₁= The price of a T-bill (rounded off to the nearest Dong);

MG = Face value of T-bill;

L_t= Discount rate of T-bill to be sold out in a swap (%/365 days);

n = Actual days between the swap date and the maturity date of T-bill.

-Other debt instruments which make no periodic interest payments and have a term of at least 01 year commencing from the issue date:

Where:

GG₁= The price of a debt instrument (rounded off to the nearest Dong);

MG₁= Face value of debt instrument;

a₁= Actual days between the swap date and the next interest payment date as assumed;

E₁= Total days of an assumed interest payment period in which the issuer carries out the debt instrument swap;

t = Number of assumed interest payments between the swap date and the maturity date;

L_t1= Discount rate of the sold debt instrument in a swap (%/year);

b) In case the swap date falls before or on the record date of the next interest payment period:

-The price of a sold debt instrument which has a fixed nominal interest rate and interest payments made periodically at equal intervals:

-The price of a sold debt instrument which has a fixed nominal interest rate and interest payments made periodically but the first interest payment period is shorter or longer than an ordinary interest payment period:

+ If the sum of actual days between the swap date and the interest payment date of the first interest payment period is shorter than an ordinary interest payment period, the price of a debt instrument sold out in a swap is calculated by adopting the following formula:

+ If the sum of actual days between the swap date and the interest payment date of the first interest payment period is longer than or equal to an ordinary interest payment period, the price of a debt instrument sold out in a swap is calculated by adopting the following formula:

Where:

GG₁= The price of a sold debt instrument (rounded off to the nearest Dong);

GL₁= Interest on a debt instrument paid in the first interest payment period according to terms of the newly issued debt instrument;

L_c1= Nominal interest rate of the sold debt instrument (%/year);

k₁= Number of interest payments of the sold debt instrument during a year;

d₁= Actual days between the swap date and the next interest payment date of the sold debt instrument;

a1 = Actual days between the swap date and the first interest payment date according to terms of a newly issued debt instrument;

a2 = Actual days between the swap date and the ordinary interest payment date as assumed;

E₁= Actual days of an interest payment period in which the issuer carries out the debt instrument swap;

L_t1= Discount rate of the sold debt instrument in a swap (%/year);

MG₁= Face value of a sold debt instrument;

t₁= Number of actual interest payments between the swap date and the maturity date of the sold debt instrument.

c) In case the swap date falls after the record date of the next interest payment period, the price of the sold debt instrument is determined by adopting the following formula:

Where:

GG₁= The price of a sold debt instrument (rounded off to the nearest Dong);

L_c1= Nominal interest rate of the sold debt instrument (%/year);

k₁= Number of interest payments of the sold debt instrument during a year;

d₁= Actual days between the swap date and the next interest payment date of the sold debt instrument;

E₁= Actual days of an interest payment period in which the issuer carries out the debt instrument swap;

L_t1= Discount rate of the sold debt instrument in a swap (%/year);

MG₁= Face value of a sold debt instrument;

t₁= Number of actual interest payments between the swap date and the maturity date of the sold debt instrument.

d) The discount rate employed to calculate the price of a sold debt instrument as prescribed in Point a, Point b and Point c of this Clause is the interest rate agreed upon by the issuer and the debt instrument holder or decided by the issuer in case of bidding for debt instrument swap.

2.The price of a purchased debt instrument in a swap is determined as follows:

a) Price of a purchased debt instrument which makes no periodic interest payments:

Where:

GG₂= The price of a debt instrument (rounded off to the nearest Dong);

MG₂= Face value of the debt instrument;

a₂= Actual days between the swap date and the next interest payment date as assumed;

E₂= Total days of an assumed interest payment period in which the issuer carries out the debt instrument swap;

t = Number of assumed interest payments between the swap date and the maturity date of the debt instrument;

L_t2= Discount rate of the purchased debt instrument in a swap (%/year).

b) In case the swap date falls before or on the record date of the next interest payment period:

-The price of a purchased debt instrument which has a fixed nominal interest rate and interest payments made periodically at equal intervals:

-The price of a purchased debt instrument which has a fixed nominal interest rate and interest payments made periodically but the first interest payment period is shorter or longer than an ordinary interest payment period:

+ If the sum of actual days between the swap date and the interest payment date of the first interest payment period is shorter than an ordinary interest payment period, the price of a purchased debt instrument in the debt instrument swap is calculated by adopting the following formula:

+ If the sum of actual days between the swap date and the interest payment date of the first interest payment period is longer than or equal to an ordinary interest payment period, the price of a purchased debt instrument in the debt instrument swap is calculated by adopting the following formula:

Where:

GG₂= The price of a purchased debt instrument in a debt instrument swap (rounded off to the nearest Dong);

GL₂= Interest on a debt instrument paid in the first interest payment period according to terms of the newly issued debt instrument;

L_c2= Nominal interest rate of the purchased debt instrument (%/year).If the purchased debt instrument in a swap is a newly issued debt instrument, its nominal interest rate is the weighted average of the bid-winning interest rates of bidders of the competitive bid and rounded off to one decimal place. If the purchased debt instrument is an additionally issued debt instrument, L_cis the nominal interest rate of the type of outstanding debt instrument for which debt instruments are additionally issued;

k₂= Number of interest payments of the purchased debt instrument during a year;

d₂= Actual days between the swap date and the next interest payment date of the purchased debt instrument;

a₃= Actual days between the swap date and the first interest payment date according to terms of a newly issued debt instrument;

a₄= Actual days between the swap date and the ordinary interest payment date as assumed;

E₂= Actual days of an interest payment period in which the issuer carries out the debt instrument swap;

L_t2= Discount rate of the purchased debt instrument in a swap (%/year);

MG₂= Face value of a purchased debt instrument;

t₂= Number of actual interest payments between the swap date and the maturity date of the purchased debt instrument.

c) In case the swap date falls after the record date of the next interest payment period, the price of the purchased debt instrument is determined by adopting the following formula:

Where:

GG₂= The price of a purchased debt instrument in a debt instrument swap (rounded off to the nearest Dong);

L_c2= Nominal interest rate of the purchased debt instrument (%/year).If the purchased debt instrument in a swap is a newly issued debt instrument, its nominal interest rate is the weighted average of the bid-winning interest rates of bidders of the competitive bid and rounded off to one decimal place. If the purchased debt instrument is an additionally issued debt instrument, L_cis the nominal interest rate of the type of outstanding debt instrument for which debt instruments are additionally issued;

k₂= Number of interest payments of the purchased debt instrument during a year;

d₂= Actual days between the swap date and the next interest payment date of the purchased debt instrument;

E₂= Actual days of an interest payment period in which the issuer carries out the debt instrument swap;

L_t2= Discount rate of the purchased debt instrument in a swap (%/year);

MG₂= Face value of a purchased debt instrument;

t₂= Number of actual interest payments between the swap date and the maturity date of the purchased debt instrument.

d) The discount rate employed to calculate the price of a purchased debt instrument as prescribed in Point a, Point b and Point c of this Clause is the interest rate agreed upon by the issuer and the debt instrument holder or decided by the issuer in case of bidding for debt instrument swap.

3.The issuer shall determine the quantities of debt instruments purchased from and sold to debt instrument holders in a swap as follows:

a) If the issuer holds bidding for the purchased debt instrument:

-The quantity of debt instruments purchased from bidders (or holders of the sold debt instruments) is calculated by adopting the following formula:

Where:

N₁= The quantity of debt instruments purchased from bidders. This quantity of purchased debt instruments will be rounded up to the nearest integer;

N₂= The quantity of debt instruments sold to bidders. The amount of debt instruments sold to each bidder shall be determined according to Clause 3 Article 19 hereof;

GG₁= Face value of a sold debt instrument;

GG₂= Face value of a purchased debt instrument.

-If the quantity of the sold debt instruments determined by adopting the formula provided in this Point exceeds the quantity of debt instruments to be swapped out as registered by bidders, the issuer shall only purchase debt instruments according to the registered quantity and determine the corresponding quantity of debt instruments to be sold out to these bidders (the result will be rounded off to the nearest integer.

b) If the issuer holds bidding for the sold debt instrument:

-The quantity of debt instruments sold out to bidders (or holders of the sold debt instruments) is calculated by adopting the following formula:

Where:

N₂= The quantity of debt instruments sold to bidders. This quantity of debt instruments will be rounded off to the nearest integer;

N₁= The quantity of debt instruments purchased from bidders. The amount of debt instruments purchased from each bidder shall be determined according to Clause 3 Article 20 hereof;

GG₁= Face value of a sold debt instrument;

GG₂= Face value of a purchased debt instrument.

Chapter IV

PAYMENT OF DEBT INSTRUMENT REPURCHASE AMOUNTS, REPURCHASE AND SWAP COSTS

Section 1. PAYMENT OF DEBT INSTRUMENT REPURCHASE AMOUNT

Article 22. Payment of debt instrument repurchase amount

1.For repurchase of debt instruments registered and deposited at Vietnam Securities Depository:

a) Not later than 11:30 AM on the repurchase date, the issuer must ensure that total amount of money for repurchase of debt instruments (including debt instruments repurchased from customers of market makers) has been fully paid and credited to the designated account of Vietnam Securities Depository;

b) On the repurchase date, Vietnam Securities Depository shall transfer money to debt instrument holders according to the list of debt instrument holders provided by the issuer. Vietnam Securities Depository shall notify the Stock Exchange of the completion of money transfer for cancelling the listing and registration, and withdrawing debt instruments according to Article 25 hereof.

2.With respect to the repurchase of debt instruments which are not registered or deposited at Vietnam Securities Depository, not later than 16:00 PM on the repurchase date as specified in the repurchase agreement, the issuer must ensure that total amount of money for repurchase of debt instruments has been fully paid and credited to the relevant holder’s account.

Section 2. DEBT INSTRUMENT REPURCHASE AND SWAP COSTS

Article 23. Debt instrument repurchase and swap costs

1.Debt instrument repurchase/ swap costs include:

a) Payments made to the State Treasury for arranging the repurchase/ swap of government debt instruments, including: Direct costs of the repurchase/ swap of government debt instruments; costs of acquisition, maintenance of technological equipment; costs of organizing meetings, training courses, surveys and researches; costs of communication and information dissemination; costs of rewards given to organizations and individuals according to the State Treasury’s regulations; other costs;

b) Costs of bidding for debt instrument repurchase/ swap organized by the Stock Exchange:These costs shall be charged according to the prices of services rendered by the Stock Exchange in conformity with the Ministry of Finance’s regulations.

2.Funding sources:

a) Costs of repurchase/swap of government debt instruments shall be covered by central-government budget.The State Treasury shall estimate costs of debt instrument repurchase/swap which it carries out and aggregate them in its annual estimate of state budget revenues and expenditures;

b) Banks for social policies shall cover costs that rise during the repurchase/swap of government-guaranteed bonds and account them as their operating expenses;

c) Costs of repurchase/swap of municipal bonds shall be covered by local-government budget.

Article 24. Fines for failure to have sufficient debt instruments by market makers who are successful in bidding for debt instrument repurchase or swap

1.Each market maker must have sufficient debt instruments on his/her depository account opened at the Vietnam Securities Depository as registered when participating in bidding for debt instrument repurchase or swap (including quantities of debt instruments registered for his/her customers) on the bidding organization date.

2.If a market maker fails to prepare sufficient debt instruments as regulated in Clause 1 of this Article, Vietnam Securities Depository shall notify it to the issuer and the Stock Exchange for cancelling bidding result in respect to debt instrument shortage.

3.The market maker who fails to prepare sufficient debt instruments as regulated in Clause 1 of this Article is liable to pay fine to the issuer. To be specific:

a) The fine payable is determined by adopting the following formula:

Where:

P = Fine payable by the market maker who is successful in bidding for debt instrument repurchase/ swap for failure to arrange sufficient debt instruments as registered;

GG = Bid-winning price of a debt instrument or price of the sold debt instrument announced by the issuer or price of the sold debt instrument acquired from bid winning;

N = Insufficient amount of debt instruments;

L₀= Overnight interbank interest rate announced by the State Bank of Vietnam on the bidding organization date (%/year);

k = 1, if the debt instrument makes no periodic interest payments, or k = the number of interest payments during a year of the debt instrument which has periodic interest payments.

b) The issuer shall give a written notification of fine to the market maker who fails to prepare sufficient debt instruments as registered. This notification must specify the fine, payment deadline and receiving account.

c) The relevant market maker must pay fine according to the issuer’s notification. With respect to government debt instruments and municipal bonds, fines will be credited to state budget account in accordance with regulations of the Law on State Budget and its instructional documents.

Chapter V

REGISTRATION, DEPOSITING AND LISTING OF DEBT INSTRUMENTS REPURCHASED OR SWAPPED, INFORMATION PUBLISHING AND REPORTING

Section 1. REGISTRATION, DEPOSITING AND LISTING OF DEBT INSTRUMENTS REPURCHASED OR SWAPPED

Article 25. Cancellation of listing, depositing and registration of debt instruments to be repurchased

1.The Stock Exchange shall cancel the listing of debt instruments upon the receipt of payment confirmation given by Vietnam Securities Depository.Upon the completion of procedures for cancellation of listing of debt instruments, the Stock Exchange shall give a notification to Vietnam Securities Depository for performing the withdrawal of deposited debt instruments and cancellation of registration of debt instruments repurchased within the same day.

2.Vietnam Securities Depository shall inform the State Treasury, the Stock Exchange and relevant depository members of results of withdrawal of deposited debt instruments and cancellation of registration of repurchased debt instruments.

Article 26. Registration, depositing and listing of debt instruments sold and purchased in debt instrument swap

1.With respect to debt instruments swapped out through bidding:

a) On the swap date, the Stock Exchange shall cancel the listing of debt instruments and inform Vietnam Securities Depository to carry out procedures for withdrawal of deposited debt instruments and cancellation of registration of the sold debt instruments which have been blocked according to Clause 7 Article 18 hereof;

­b) Upon the completion of withdrawal of deposited debt instruments and cancellation of registration of the sold debt instruments according to Point a of this Clause, Vietnam Securities Depository shall carry out the registration and depositing of debt instruments, and notify the Stock Exchange for listing of corresponding purchased debt instruments.

2.With respect to debt instruments swapped out through negotiation:

Based on debt instrument swap results provided by the issuer, the Stock Exchange shall cancel the listing of debt instruments and inform Vietnam Securities Depository to carry out procedures for withdrawal of deposited debt instruments and cancellation of registration of the sold debt instruments which have been blocked according to Clause 6 Article 14 hereof. Vietnam Securities Depository shall carry out the registration and depositing of debt instruments, and notify the Stock Exchange for listing of corresponding purchased debt instruments.

Section 2. REPORTING AND INFORMATION PUBLISHING

Article 27. Publishing of repurchase-related information

1.Within three (03) business days after the repurchase date, the issuer shall publish the following information on its website and provide it for the Stock Exchange and Vietnam Securities Depository:

a) The initial issue date, maturity date, nominal interest rate, and method of principal and interest payment of each repurchased debt instrument’s code;

b) The repurchase date, repurchase interest rate, quantity of repurchased debt instruments, and repurchase method.

2.The Stock Exchange shall publish on its website the information concerning the cancellation of listing of repurchased debt instruments according to Clause 1 Article 25 hereof.

3.Vietnam Securities Depository shall publish on its website the information concerning the cancellation of registration of repurchased debt instruments according to Clause 2 Article 25 hereof.

Article 28. Publishing of swap-related information

1.Within three (03) business days after the swap date, the issuer shall publish the following information on its website and the website of the Stock Exchange:

a) The quantity of debt instruments swapped out, sorted by code of each sold debt instrument, and discount rate of each sold debt instrument;

b) Code of the purchased debt instrument and the quantity of debt instruments actually swapped out, sorted by code of each debt instrument, and discount rate of each purchased debt instrument.

2.The Stock Exchange shall publish on its website the information concerning the cancellation of listing of sold debt instruments and listing of purchased debt instruments according to Article 26 hereof.

3.Vietnam Securities Depository shall publish on its website the information concerning the cancellation of registration of sold debt instruments and the registration and depositing of purchased debt instruments according to Article 26 hereof.

Article 29. Reports on debt instrument repurchase and swap

1.Reports submitted to the Ministry of Finance:

Within ten (10) business days after the completion of each debt instrument repurchase/ swap as regulated hereof, the issuer is required to submit a report to the Ministry of Finance. Such report must include:

a) Code and quantity of repurchased debt instrument; codes and quantities of the purchased and sold debt instruments in a swap;

b) Repurchase or swap interest rate of each debt instrument code.

2.Reports submitted to the Provincial-level People’s Council:

The Provincial-level People s Committee shall include the following contents in the local government’s annual borrowing and repayment plan which is submitted to the Provincial-level People’s Council:

a) The quantity of repurchased debt instrument; quantities of the purchased and sold debt instruments in a swap.Repurchase interest rate or swap interest rate;

b) Debt limit of the provincial-level budget after the bond repurchase or swap.

Chapter VI

RESPONSIBILITY OF RELEVANT ORGANIZATIONS

Article 30. Responsibility of Ministry of Finance

1.Stipulate the minimum repurchase interest rate and the swap interest rate bracket as regulated in Clause 1 Article 3 hereof.

2.Provide funds derived from the central-government budget for repurchase of government debt instruments, and covering costs of organizing repurchase and swap of government debt instruments.

Article 31. Responsibility of Provincial-level People’s Committees

1.Carry out the repurchase and swap of municipal bonds according to plans approved by competent authorities and regulations herein.

2.Cooperate with Vietnam Securities Depository and the Stock Exchange in publishing information in accordance with regulations herein.

Article 32. Responsibility of State Treasury

1.Organize the repurchase and swap of government debt instruments according to repurchase or swap schemes approved by competent authorities and regulations herein.

2.Comply with regulations on reporting and accounting of repurchased or swapped debt instruments in accordance with regulations herein and applicable legislative documents.

3.Cooperate with Vietnam Securities Depository and the Stock Exchange in publishing information in accordance with regulations herein.

Article 33. Responsibility of banks for social policies issuing government-guaranteed bonds

1.Carry out the repurchase and swap of debt instruments according to plans approved by competent authorities and regulations herein.

2.Cooperate with Vietnam Securities Depository and the Stock Exchange in publishing information in accordance with regulations herein.

Article 34. Responsibility of Stock Exchange

1.Organize bidding for repurchase or swap of debt instruments in accordance with regulations herein.

2.Keep and manage information concerning the bidding for repurchase or swap of debt instruments in accordance with applicable regulations.

3.Publish information in accordance with regulations herein.

4.Carry out or cancel the list of debt instruments in accordance with regulations herein.

Article 35. Responsibility of Vietnam Securities Depository

1.Block, release or cancel registration and depositing of debt instruments sold in swapping or repurchased or perform the registration and depositing of corresponding debt instruments purchased in swapping in accordance with regulations herein.

2.Make payments of debt instrument repurchase to debt instrument holders in accordance with regulations herein.

3.Publish information in accordance with regulations herein.

Chapter VII

IMPLEMENTATION

Article 36. Implementation

1.This Circular takes effect on January 01, 2019.

2.This Circular supersedes the following:

a) The Circular No. 150/2011/TT-BTC dated November 09, 2011 by the Ministry of Finance;

b) The Circular No. 22/2017/TT-BTC dated March 15, 2017 by Ministry of Finance;

c) Regulations on payments made to the State Treasury for organization of repurchase and swap of government bonds in Clause 1 Article 3 of the Circular No. 15/2018/TT-BTC dated February 07, 2018 by the Ministry of Finance.

3.Any difficulties that arise during the implementation of this Circular must be promptly reported to the Ministry of Finance for consideration./.

For The Minister

Deputy Minister

Huynh Quang Hai