Circular No. 22/2017/TT-BTC dated March 15, 2017 of the Ministry of Finance stipulating on re-purchase of Government bonds in domestic market

THE MINISTRY OF FINANCE

Circular No. 22/2017/TT-BTC dated March 15, 2017 of the Ministry of Finance stipulating on re-purchase of Government bonds in domestic market

Pursuant to the Law on Public Debt Management dated June 17, 2009;

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

Pursuant to the Decree No. 215/2013/ND-CP dated December 23, 2013 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Decree No. 01/2011/ND-CP dated January 05, 2011on issuance of government bond,government-guaranteed bonds and local government bonds;

Pursuant to the Decision No. 56/2012/QD-TTg of the Prime Minister dated December 21, 2012 promulgating a regulation of management and handling of risks to the list of public debts;

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

The Minister of Finance promulgates the Circular onre-purchase of Government bonds in domestic market;

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application and subjects of application

1. This Circular regulatesre-purchase of Government bonds (hereinafter referred to as bonds) before maturity date in domestic market.

2. Subjects of application are the State Treasury, Stock Exchange, Vietnam Securities Depository, Organizations and individuals related to re-purchase of bonds.

Article 2.Interpretation of terms

 In addition to termed interpreted under the Decree No. 01/2011/ND-CP dated January 05, 2011 on issuance of government bond, government-guaranteed bonds and local government bonds (hereinafter referred to as the Decree No. 01/2011/ND-CP) under this Circular, terms shall be interpreted as follows:

1. “Re-purchase of bonds” is the re-purchase of bonds processed by the State treasury before the maturity date.

2. “Resale of bonds” is that the bondholder re-sells bonds to the State Treasury before the maturity date.

3. “The last day to register for resale of bonds” is the last day that bondholders or organizations authorized to register resale of bonds by bondholders according to the notifications issued by the State Treasury for each period of repurchase of bonds. The State Treasury shall decide on the last day of registering for resale of bonds in each period of bond repurchase but it must be at least 3 working days before the date of bond repurchase is held.

Article 3.Interest rates of bond repurchase

1. The Ministry of Finance shall decide on the minimum interest rate frame of bond repurchase for each period or in each time of bond repurchase.

2. Based on the minimum interest rate frame as stipulated under Clause 1 of this Article, the State Treasury shall select and decide on repurchase interest rate for each period of bond repurchase.

Article 4.Purposes of bond repurchase

1. To restructure the list of Government bond debts according to the scheme approved by competent agencies;

2. To develop the market for Government bonds through developing standard interest in the market and increase market liquidity.

Article 5. Principles of bond repurchase

1. Implementing according to the plan on bond repurchase as approved by competent agencies as stipulated under Clause 3 Article 8 of this Circular.

2. Ensuring the accuracy

3. Complying with regulations under this Circular and other laws.

Article 6.Conditions for repurchased bonds

1. Being bonds issued by the State Treasury and not at the maturity date;

2. Not being bound in

Article 7. Methods of repurchasing bonds

1. Repurchasing bonds shall be processed according to one of the following methods:

a) To negotiate directly with bondholders;

b) To auction through the Stock Exchange;

2. The State Treasury shall notify the method of repurchasing bonds for each period before it is held;

Article 8. Plans on repurchasing bonds

1. Based on demand of restructuring the list of Government bond debts and development of Government bonds, the State Treasury shall build the plan on repurchasing bonds as stipulated under Clause 2 of this Article, report to the Ministry of Finance for approval or submit to the Prime Minister for approval as stipulated under Clause 3 of this Article.

2. Basic contents of plans on repurchasing bonds include:

a) Purposes;

b) Conditions, provisions of bonds that are going to be repurchased including: code, scale of bond code, date of the first issuance, maturity date, remaining term of the bond at the tentative time of repurchasing bonds, notational interest rate, method of payment, bond interest, list of bondholders at the time of building the plan;

c) Tentative methods of repurchasing;

d) Source of repurchasing bonds, expenses for repurchasing bonds;

dd) Tentative time of repurchasing bonds;

3. Based on competence of approving the plan on repurchasing bonds as stipulated under Article 13 of the Decision No. 56/2012/QD-TTg dated December 21, 2012 of the Prime Minister promulgating a regulation of management and handling of risks to the list of public debts, the Ministry of Finance shall approve the plan on repurchasing bonds or submit to the Prime Minister for approval under its competence;

4. Based on the plan of repurchasing bonds approved by competent agencies as stipulated under Clause 3 of this Article and sources of repurchasing that are allocated in the estimation of state budget, the State Treasury shall repurchase Government bonds as stipulated under this Circular;

Chapter II

REPURCHASING BONDS THAT ARE REGISTERRED AND DEPOSITTED AT VIETNAM SECURITIES DEPOSITORY

Section 1

NEGOTION ON REPURCHASING BONDS

Article 9.Procedures of negotiating on repurchasing bonds

1. No more than 5 working days before the day of repurchasing bonds, the State Treasury shall notify information on repurchasing bonds on the Portal of the Ministry of Finance, the State Treasury and the Stock Exchange. The content of notification includes:

a) Provisions of tentative repurchased bonds including: bond code, scale of bond code, date of first issuance, maturity date, notational interest, method of payment of the principal, bond interest;

b) Quantity of tentative repurchased bonds for each code of bonds;

c) The last day of registering on resale of bonds, date of blocking bonds, date of repurchasing bonds and tentative date of repurchasing bonds;

2. Based on notification on repurchasing bonds as stipulated under Clause 1 of this Article, bondholders or authorized organizations shall register to resell bonds to the State Treasury according to the Form under Appendix 1 of this Circular. Applications on reselling bonds that apply after the last day of registering to resell bonds are invalid.

3. After the last day of registering to resell bonds, based on the information on registration of reselling bonds, the State Treasury shall notify to Vietnam Securities Depository to block numbers of bonds registered to resell according to the Form according to Appendix 2 of this Circular. Vietnam Securities Depository shall block numbers of bonds of bondholders registered to resell and notify to the State Treasury on blockage.

4. On the day of repurchasing bonds, based on information registered on reselling bonds of bondholders, notification on blockage of bonds registered to resell issued by Vietnam Securities Depository, the State Treasury shall negotiate and reach an agreement with bondholders or authorized organizations on provisions on repurchasing bonds. Contents of negotiation include:

a) Number of bonds repurchased for each bond code;

b) Interest rate of repurchasing for each bond code as stipulated under Article 3 of this Circular;

c) Date of repurchasing bonds;

d) Price of a bond repurchased; the price of repurchased bonds shall be determined as stipulated under Article 14 of this Circular;

dd) The total number of repurchasing bonds shall be determined by the number of bonds repurchased multiplied by the price of a bond;

5. On the basis of reaching an agreement on results of negotiation, the State Treasury and bondholders or authorized organizations shall sign the contract on repurchasing bonds according to the Form under Appendix 3 of this Circular on the date of repurchasing bonds.

6. No later than 01 day since the date of repurchasing bonds is done, the State Treasury shall notify to Vietnam Securities Depository and the Stock Exchange on results of negotiation on repurchasing bonds according to the Form under Appendix 4 of this Circular. Based on the notification sent by the State Treasury, Vietnam Securities Depository shall block bonds that are signed to repurchase and stop blocking bonds that are not repurchased.

7. On the date of repurchasing bonds as the contract signed with bondholders, the State Treasury shall transfer money for repurchasing bonds as stipulated under Article 16 of this Circular;

8. Cancellation of listing, registration and removal of depository of repurchased bonds shall be implemented according to Article 17 of this Circular;

9. At the end of repurchasing bonds, the State Treasury shall publish information on results of repurchasing bonds as stipulated under Article 18 of this Circular.

Section 2

AUCTION ON REPURCHASING BONDS

Article 10. Principles of auction, forms of auction and methods of determining the winning price

1. Principles of auction

a) Equality on rights and obligations among auction members in accordance with the law;

b) Security on joining the auction of members;

c) Forms of auction

Auction on repurchasing bonds shall be implemented in one or two forms as follows:

a) Competitive auction on interest;

b) Auction combining with competitive interest and non-competitive interest.

If auction is organized in the form of competitive interest and non-competitive interest, total number of bonds repurchased from auction members with non-competitive interest shall not exceed 30% of the total repurchased bonds in the auction;

3. Methods of determining the winning price

Results of the auction shall be determined in one or two forms as follows:

a) One-price auction;

b) Multiple price auctions;

4. The State Treasury shall notify on forms of auction, methods of determining results for each period of repurchasing bonds;

Article 11. Subjects of joining the auction on repurchasing bonds

1. Being members of actions on Government bonds according to the annual notification issued by the Ministry of Finance;

2. Being members of auction on reselling bonds under their ownership or being authorized to sell bonds;

Article 12. Procedures on repurchasing bonds

1. No later than 5 working days before the date of repurchasing bonds, at the proposal of the State Treasury, the Stock Exchange shall notify on repurchasing bonds to all members joining the auction and publish information on the Portal of the Stock Exchange. The content of the notification includes:

a) Provisions of bonds that are going to be repurchased, including: code of bond, scale of bond code, date of the first issuance, maturity date, notational interest, method of payment for the principal, bond interest;

b) Tentative quantity of repurchased bonds for each code of bonds;

c) The last day of registering to resell bonds, date of blocking bonds, date of repurchasing bonds and date of organizing to repurchase bonds;

d) Forms of auction, methods of determining results of auction;

2. Based on the notifications on repurchasing bonds as stipulated under Clause 1 of this Article, members auctioning Government bonds shall send the registration application on reselling bonds according to the Form as stipulated under Appendix 5 of this Circular. The registration application on reselling bonds that is applied after the last day of registering on reselling bonds is not valid.

3. After the last day of registering to resell bonds, based on information registered by members auctioning Government bonds under Clause 2 of this Article, the Stock Exchange shall notify to Vietnam Securities Depository to block bonds registered to resell according to the Form as stipulated under Appendix 6 of this Circular. Vietnam Securities Depository shall block number of bonds registered to resell and notify to the Stock Exchange and the State Treasury on the blockage of bonds.

4. No later than 10h30 at the day of organizing to repurchase bonds, auctioning members shall send information on joining the auction to the Stock Exchange as stipulated and the application form on joining the auction as stipulated by the Stock Exchange. Each member joining the auction and each customer of members joining the auction with competitive interest shall be entitled to put 5 rates over one

5. No later than 15 minutes after the last application on registration to join the auction as stipulated under Clause 4 of this Article, the Stock Exchange shall open the bid, summarize information on tenders and send to the State Treasury.

6. Based on information on joining the auction received from the Stock Exchange, the State Treasury shall determine repurchasing interest rate for each bond code and notify to the Stock Exchange to determine on the result of bidding as stipulated under Article 13 of this Circular.

7. At the end of the auction, the Stock Exchange shall notify results of the auction to members joining the auction by electronic data through electronic bond auction system.

8. After finishing the auction on repurchasing bonds, the Stock Exchange shall notify results of the auction on repurchasing bonds to the State Treasury, Vietnam Securities Depository according to the Form as stipulated under Appendix 7 of this Circular. Vietnam Securities Depository shall continue to block bonds that win the bid and stop blocking bonds that fail to repurchase at the date of organizing to repurchase bonds.

9. At the date of repurchasing bonds, the State Treasury shall transfer money to repurchase bonds as stipulated under Article 16 of this Article.

10. Cancellation of listing, cancellation of registration and removal of depository of bonds shall be implemented according to Article 17 of this Circular.

11. When repurchasing bonds is finished, units shall publish information as stipulated under Article 18 of this Circular.

Article 13.Determination on results of the auction

1. Basis to determinebid-winning volume andinterest rate, price of repurchasing bonds:

a) Volume of bonds repurchased;

b) Interest and volume of bonds bidding;

c) Minimum interest frame of repurchasing bonds as stipulated under Article 3 of this Article;

2. Methods of determining bid-winning interest:

a) For one-price bidding:

Bid-winning interest rate is the minimum bidding rate applied for all members winning the bid (competitive and non-competitive interest) and shall be selected in orders from the highest to lowest of bidding interest rate, and satisfies 2 following conditions:

- Within the minimum interest frame as stipulated by the Ministry of Finance;

- Volume of repurchased bonds is accumulated to the bid-winning interest shall not exceed volume of bonds that are notified to repurchase;

b) For multiple – price bidding:

- Bid – winning interest applied for each bid-winning member with competitive interest is the bidding rate of that member and shall be selected in orders from the highest to lowest of the bidding interest and satisfies 2 following conditions:

+ Weighted average of bid-winning interest rate is not lower than the minimum interest frame of repurchasing bonds as stipulated by the Ministry of Finance;

+ Volume of repurchased bonds accumulated to the lowest bid-winning interest shall not exceed volume of bonds called for bidding.

- Bid – winning interest applied for members joining the bid under the form of non-competitive interest is weighted average of bid-winning interest and shall be rounded to 02 decimal numbers.

3. Methods of determining volume of bid-winning bonds for each member of bidding:

Chapter IV

IMPLEMENTATION PROVISIONS

Article 23. Implementation provisions

1. This Circular takes effect on May 01, 2017.

2. The State Treasury is entitled to apply negotiation procedures on re-purchase of bonds as stipulated under Clause 4 Article 9 of this Circular to re-purchase bonds that are not registered and deposited at Vietnam Securities Depository.

3. The Decision No. 2346/QD-BTC dated September 28, 2009 of the Minister of Finance promulgating Regulations on re-purchase Government bonds shall be ceased to be effective since this Circular takes effect.

Article 24. Implementation organization

1. The Head of the Office of the Ministry of Finance, Director of Department of Banks and Financial organizations, General Director of the State Treasury, General Director of the Stock Exchange, and General Director of Vietnam Securities Depository and heads of related units shall implement this Circular.

2. In the course of implementing this Circular, any arising problems should be reported promptly to the Ministry of Finance by the State Treasury and related units for research and guidelines./.

For The Minister

Deputy Minister

Tran Van Hieu