CIRCULAR

GUIDANCE ON ISSUANCE OF GOVERNMENT BONDS IN DOMESTIC MARKET

Pursuant to the Law on public debt management dated June 17, 2009;

Pursuant to the Law on securities dated June 29, 2006 and the Law dated November 24, 2010 on amendments to a number of articles of the Law on securities;

Pursuant to the Law on state budget dated December 16, 2002;

Pursuant to the Government’s Decree N0. 215/2013/ND-CP dated December 23, 2013 defining the functions, tasks, powers and organizational structure of Ministry of Finance;

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

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

Minister of Finance promulgates a Circular providing the guidance on the issuance of Government bonds in the domestic market.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. Scope:

a) This Circular provides detailed guidance on issuance of Government bonds (hereinafter referred to as “bonds”) in the domestic market;

b) Methods and procedures for repurchase or swap of bonds, registration modification, deposit, listing of bonds repurchased or swapped shall comply with other instructional documents of Ministry of Finance.

2. This Circular applies to the State Treasury and organizations and individuals involved in the issuance of bonds in the domestic market.

Article 2. Interpretation of terms

In this document, these terms, in addition to the terms interpreted in the Decree No. 01/2011/ND-CP shall be construed as below:

1. “Initially issued bonds” refer to the new bonds which are issued for the first time on the primary market.

2. “Additional bonds” refer to the bonds which are additionally issued for a code of outstanding bonds and have the same coupon rate and maturity date with the outstanding bonds.

3. “Issue date” means the date on which the payment of bond purchase amount is made. With respect to initially issued bonds, the issue date is also the effective date of bonds.

4. “Date of bond issuance organization” refers to the date on which the bidding is organized if bonds are issued through bidding method or the date on which the State Treasury signs the underwriting contract if bonds are issued by adopting the underwriting method.

5. “Bond settlement date” refers to the date on which the bond buyer makes payment of bond purchasing amount to the issuer.

6. "Coupon rate” is the annual interest rate on bond which is expressed as a percentage (%) of the bond's face value and paid by the issuer to a bondholder in interest payment periods under terms and conditions of the bond.

7. “Interest rate of bonds issued” refers to the bid-winning interest rate or the underwriting interest rate which is decided by the State Treasury according to bidding or underwriting result in accordance with regulations herein; or the interest rate announced by the Ministry of Finance if bonds are issued through brokerage or retailing via the system of the State Treasury.

8. “Term to maturity” refers to the actual remaining time of bond between when the bond is additionally issued and when it matures.

9. "Issue of bonds at par” refers to the issuance of the bond at a price equal to its par value.

10. "Issue of bonds at discount” refers to the issuance of bond at a price lower than its par value.

11. "Issue of bonds at premium” refers to the issuance of bond at a price higher than its par value.

12. “Zero-coupon bond” refers to a type of bond which is issued below par with no regular interest paid; the full principal and interest shall be paid in lump sum at the maturity date of bond.

13. “Fixed-rate tender” refers to the method of determining bidding result whereby the interest rate of bonds issued is the highest bid-winning interest rate and commonly applied to all successful bidders.

14. “Variable-rate tender” refers to the method of determining bidding result whereby the interest rate of bonds issued applied to each successful bidder is equal to the interest rate offered by such bidder.

15. “Final date of bond registration” refers to the date on which Vietnam Securities Depository identifies the list of bondholders to pay bond principal and interest.

Article 3. Issuer

1. The bond issuer is Ministry of Finance.

2. Ministry of Finance authorizes State Treasury to organize the issuance of bonds in accordance with regulations herein.

Article 4. Terms and conditions of bonds

In addition to terms and conditions of bonds prescribed in Article 6 of the Decree No. 01/2011/ND-CP the Ministry of Finance shall provide detailed guidance on the terms and conditions of bonds. To be specific:

1. Term

a) Standards terms of Treasury bills are 13 weeks, 26 weeks and 52 weeks;

b) Standard terms of treasury bonds and national development bonds are 2 years, 3 years, 5 years, 7 years, 10 years, 15 years, 20 years and 30 years;

c) Ministry of Finance shall decide the issuance of bonds in other standard terms where necessary;

d) Pursuant to regulations in Points a, b and c of this Clause and based on budget management objectives, the State Treasury shall announce specific term of bond in each issue.

2. Face value

a) The face value of bond is one hundred thousand Vietnamese dongs (VND 100,000). Other face values of bond shall be the multiples of one hundred thousand Vietnamese dongs (VND 100,000);

b) Ministry of Finance shall stipulate the face value of bonds issued in foreign currency in each issue according to the Scheme for issuance of foreign currency bonds approved by the Prime Minister.

3. Issuance methods

Bonds are issued through the following methods: bidding, underwriting, brokerage and retailing via the system of State Treasury.

4. Form

a) Bonds issued through bidding or underwriting method shall be issued under the forms of book entries or electronic data;

b) Bonds issued through brokerage or retailing shall be issued under the forms of certificates, book entries or electronic data.

5. Bond coupon rate

a) The coupon rate may be the fixed interest rate or floating interest rate as announced by the State Treasury at the issuance time;

b) If the coupon rate is the floating interest rate, Ministry of Finance shall announce the reference rate and method of determining the bond’s selling price at each issue.

6. Payment of bond principal and interest

- With respect of bonds which are issued through bidding or underwriting with interest paid periodically, the bond interest shall be paid every six (06) months or twelve (12) months, and the payment of bond principal shall be made in lump sum at the maturity date;

- With respect of zero-coupon bonds which are issued through bidding or underwriting, the issuer must not make regular interest payment. The sum of principal and interest shall be paid in lump sum at the maturity date;

- With respect of bonds which are issued through brokerage or by retailing via the State Treasury's system, the bond interest shall be paid every six (06) months or twelve (12) months; the bond principal may be paid in lump sum at the maturity date or before the maturity date in accordance with regulations announced at each issue.

7. Additional issuance of bonds

The State Treasury shall decide the additional issuance of bonds with the aim of ensuring the market liquidity. Term to maturity of the bond code at the time of additional issuance must be at least one (01) year.

Article 5. Interest rate of bonds issued

1. The Ministry of Finance shall stipulate the bracket of bond interest rates applied to each period or each issue.

2. The State Treasury shall decide the interest rate of bonds issued according to the interest rate bracket regulated in Clause 1 of this Article.

Chapter II

FORMULATING PLAN AND ORGANIZING BOND ISSUANCE

Article 6. Formulating and publishing the plan for bond issuance

1. Based on the target for raising funds for state budget and for investment and development approved by the National Assembly, the State Treasury shall annually formulate and announce the plan for bond issuance for the whole year.

2. Based on the plan for bond issuance for the whole year and the plan for quarterly state budget management, the State Treasury shall quarterly formulate and announce the plan for bond issuance for each quarter.

3. The plans for annual and quarterly bond issuance shall be published on the website of Ministry of Finance, the State Treasury and the Stock Exchange.

Article 7. Organizing the bond issuance

1. Based on the announced plan for bond issuance, the State Treasury shall organize the issuance of bonds in accordance with regulations herein and relevant legislative documents.

2. The issuance of treasury bills through bidding via the Operations Center of the State Bank or by selling to the State Bank shall be performed in accordance with the written guidance of Ministry of Finance and the State Bank.

3. Before organizing the issuance of national development bonds and/or foreign currency bonds (if any), the Ministry of Finance must formulate and submit the issuance Schemes to the Prime Minister for approval. The issuance scheme includes:

a) Purposes of bond issuance;

b) Terms and provisions of bond: form, term, currency, face value, interest rate, issuance date and method of payment of bond interest; intended quantity of bonds to be issued;

c) Buyers;

d) Plan for organizing the bond issuance.

4. Before the issuance of bonds by retailing via the system of State Treasury or through agents, the State Treasury shall formulate the plan for bond issuance and submit it to the Ministry of Finance for approval.

Article 8. Schedule of bond issuance

1. Bonds issued through bidding or underwriting:

a) Date of bond issuance organization shall be Wednesday weekly. The State Treasury may, in certain cases, with the aim of ensuring the development of bond market and state budget management, organize the bond issuance in a day other than Wednesday weekly.

b) The bond settlement shall be made within the working day following the date of bond issuance organization.

c) Pursuant to regulations in Points a, b of this Clause, the State Treasury shall publish the schedule for bond issuance through bidding or underwriting in the following year on the websites of Ministry of Finance, the State Treasury and the Stock Exchange by December 31 of the preceding year.

2. Bonds issued through brokerage and retailing via the system of State Treasury:

a) Based on the plan for bond issuance through the issuance method adopted by Ministry of Finance, the State Treasury shall announce the schedule of bond issuance and organize the issuance of bonds in accordance with regulations herein.

b) The bond settlement shall be made on the date on which the investor purchases bonds at the agent or the State Treasury.

Article 9. Bidders

1. Annually, Ministry of Finance shall, based on conditions for participants in auction for bond issuance (hereinafter referred to as bidders) and criteria for evaluating the bidder's operations as prescribed in Articles 10, 11 and 14 herein, select qualified bidders and announce the list of bidders. The list of bidders shall be published on the websites of Ministry of Finance, the State Treasury and the Stock Exchange by December 31 of every year.

2. Vietnam Social Security Administration and Deposit Insurance of Vietnam are recognized as bidders. To be specific:

a) Have the right to participate in non-competitive bid;

b) Have the right to participate in competitive bid via other bidders;

c) It is not mandatory for Vietnam Social Security Administration and Deposit Insurance of Vietnam to comply with regulations on rights and obligations of bidders mentioned in Article 10 herein.

Article 10. Rights and obligations of bidders

1. A bidder shall have the following rights:

a) To be the sole entity that may participate in issues of Government bonds, government-guaranteed bonds and municipal bonds through bidding. A bidder may participate in the bidding to purchase for himself/ herself or purchase for his/her customers.

b) To be selected with priority by the State Treasury as the main underwriter for bond issues through underwriting provided the bidder must satisfy all of requirements specified in Article 25 herein;

c) To be selected with priority by the State Treasury as an agent for bond issues through brokerage;

d) To have periodic exchanges with the Ministry of Finance about the bond issuance and orientations for bond market development policies;

dd) To register for purchase of an additional quantity of bonds after a bidding session as notified by the State Treasury if the bidder satisfies all of requirements in Clause 2 Article 22 herein.

2. A bidder shall have the following obligations:

a) To bid at bidding sessions for Government bonds with a rational frequency and interest rate in compliance with regulations adopted by the Ministry of Finance at each period;

b) To annually purchase the Government bonds at a minimum quantity regulated by the Ministry of Finance at each period;

c) To make full and timely payment of bonds purchased from bid winning;

d) Announce the interest rate or reference prices for buying or offering on the specialized Government bond market as regulated by the Stock Exchange;

dd) To strictly comply with reporting policies as regulated in Article 44 herein.

3. Based on the market developments, the plan for bond issuance and other regulations prescribed in Clause 1 and Clause 2 of this Article, Ministry of Finance shall stipulate rights and obligations of bidders in each period.

Article 11. Requirements for registration as bidder

1. Be a commercial bank, financial company, securities company, insurance company, investment fund or another financial institution which is lawfully established and operates in Vietnam.

2. Have the charter capital actually contributed at least equal to the legal capital as regulated relevant laws.

3. Have an operating period of not less than three (03) years. If it is an acquiring institution or an institution established after partial or full division, or consolidation, its operating period shall include the operating period before it is partially or fully divided, acquired or consolidated.

4. Be a member of the specialized Government bond market at the Stock Exchange.

5. Have performed buying activities or brokerage activities for buying/selling bonds on the primary or secondary market with the minimum quantity prescribed by the Ministry of Finance at Point b Clause 2 Article 10 herein within one (01) year prior to the application for becoming bidder. The quantity of bonds bought in the primary market shall include the quantity of bonds bought through bidders, underwriter syndicate and/or agents and that of bonds bought through retailing method.

Article 12. Application for registration as bidder

1. The application form using the template provided in Appendix 1 enclosed herewith.

2. The copy of business license (copy made from the master register, copy certified by a competent authority or uncertified copy presented with its original for comparison).

3. The financial statements of three (03) years preceding the year of application. The financial statements must be audited by an independent audit organization which lawfully operates in Vietnam.

4. The quarterly financial statement up to the latest time before the date of application.

5. The report on participation in the bond market within at least one (01) year prior to the date of application using templates provided in Appendix 2 enclosed herewith.

6. The document proving the applicant’s membership of the specialized Government bond market at the Stock Exchange.

Article 13. Procedures and formalities for recognition as bidder

1. Ministry of Finance shall consider applications for registration as bidder and announce qualified applicants as bidders on an annual basis.

2. An organization that meets all of requirements mentioned in Article 11 herein and wants to become a bidder in the following shall submit one (01) set of application dossiers prescribed in Article 12 herein to the Ministry of Finance. The application must be submitted in November of every year from the 01^st to 10^th day.

3. Within five (05) working days from the receipt of application, the Ministry of Finance shall check the sufficiency and legality of the application and request the applicant to supplement the application (if any).

4. Upon the receipt of the sufficient application, the Ministry of Finance shall consider and evaluate the application according to the criteria mentioned in Article 11 herein. Based on the application consideration results, the Ministry of Finance shall announce the list of bidders as prescribed in Clause 1 Article 9 herein. If the application is rejected, the Ministry of Finance shall send a written notification to the applicant and provide explanation.

Article 14. Annual evaluation of eligibility of bidders

1. Ministry of Finance shall annually evaluate the bidder’s operations in order to consider recognizing the eligibility of such bidder in the following year. Evaluation contents:

a) The satisfaction of requirements for bidder as prescribed in Clauses 1, 2 and 4 Article 11 herein;

b) The fulfillment of bidder’s obligations as prescribed in Clauses 2 and 3 Article 10 herein.

2. Evaluation process:

a) From the 01^st to 10^th day of November every year, the bidder shall submit the Ministry of Finance the report on participation in the bond market for the evaluation period ranging from November 01 of preceding year to October 31 of current year. The reporting contents are prescribed in Clause 2 Article 44 herein;

b) Based on the report submitted by the bidder as regulated in Point a of this Clause and the database of Ministry of Finance, Ministry of Finance shall evaluate the bidder’s operations in compliance with regulations in Clause 1 of this Article. Bidders that have satisfied all of requirements and discharged bidder’s obligations may maintain their operations as bidders in the following year and are named in the list of bidders announced by the Ministry of Finance as prescribed in Clause 1 Article 9 herein. If the bidder fails to satisfy requirements and discharge bidder’s obligations to maintain his/her operations as a bidder, the Ministry of Finance shall send a written notification to such unqualified bidder and provide explanation.

Article 15. Annual ranking of bidders

1. Ministry of Finance shall annually rank bidders according to their participation in the bond market. A bidder shall be evaluated and ranked according to the following criteria: the bidder’s financial status, the bidder’s activities in the primary market and those in the secondary market. Detailed criteria are provided for in Appendix 3 enclosed herewith. The Ministry of Finance shall stipulate the proportion of each criterion at each period according to developments of the bond market.

2. Ranking process:

Based on annual report submitted by the bidder, database of the Ministry of Finance, ranking criteria and announced proportion of each ranking criterion, the Ministry of Finance shall evaluate and rank the bidder. The ranking results shall be published on the websites of Ministry of Finance and the Stock Exchange.

Article 16. Changes compulsorily reported to Ministry of Finance

Within ten (10) working days from the occurrence of any of the following changes, the bidder must inform the Ministry of Finance in writing:

1. The bidder has its business license suspended or revoked.

2. The bidder is partially or fully divided, consolidated, merged, transformed, suspended, dissolved or declared bankrupt.

3. The membership of the specialized Government bond market at the Stock Exchange is compulsorily or voluntarily terminated.

4. The bidder’s business activities are under the special control by a competent state authority in accordance with relevant laws.

Article 17. Terminating eligibility of bidder

1. The Ministry of Finance may consider terminating the eligibility of a bidder in the following cases:

a) The bidder has its business license revoked or withdrawn;

b) The bidder has its activities suspended, is dissolved or declared bankrupt;

c) The bidder’s business activities are under the special control by a competent state authority;

d) The bidder submits an application for termination of bidder’s activities;

dd) The bidder fails to satisfy eligibility requirements for bidder as announced by the Ministry of Finance in accordance with regulations in Article 14 herein.

2. The Ministry of Finance shall provide a written notification to the bidder on terminations of its eligibility as bidder, and publish information thereof on the websites of Ministry of Finance, the State Treasury and the Stock Exchange.

Chapter III

METHODS OF BOND ISSUANCE

Section 1. ISSUANCE OF BONDS THROUGH BIDDING

Article 18. Bidding form and methods of determining winning bid price

1. The bidding for bond issuance may be conducted by adopting either one of the following forms:

a) Competitive bid;

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

2. The bidding result is determined adopting either one of the following methods:

a) Fixed-rate tender;

b) Variable-rate tender.

Based on the market developments, the State Treasury shall request the Ministry of Finance to consider approving before adopting the variable-rate tender method. Contents requiring the approval by Ministry of Finance include: bidding time and intended term of bonds issued through the variable-rate tender method.

3. The State Treasury shall make specific notification of the bidding form and method of determining winning bid price before each issue of bonds through bidding.

Article 19. Rules for organization of bidding

1. The bidder’s bid information must be kept secret.

2. Rights and obligations amongst bidders must be performed openly and impartially in accordance with law regulations.

3. In case the bidding is held in the form of combination of competitive bid and non-competitive bid as specified in Point b Clause 1 Article 18 herein, total quantity of bonds issued to bidders of non-competitive bid shall not exceed 30% of total quantity of bonds offered by the issuer in a bidding session.

Article 20. Procedures and formalities for organization of bidding

1. At least four (04) working days prior to the date of bond issuance organization, the Stock Exchange shall, upon the request of the State Treasury, send notification of bond issuance to all bidders and publish information thereof on its website. Information to be informed:

a) The code of bonds to be issued granted by Vietnam Securities Depository;

b) Term of bond, intended quantity of each code of bonds for bidding, including information about whether bonds are initially issued or additionally issued. If bonds are additionally issued, terms and conditions of outstanding bonds must be specified;

c) The date of bond issuance organization, issue date, bond settlement date, date of interest payment and maturity date sorted by bond code;

d) Method of principal and interest payment;

dd) Bidding form;

e) Method of determining bidding result;

g) The reference rate and method of determining the bond’s selling price if the coupon rate is the floating interest rate.

h) The State Treasury’s account for receiving bond payments.

2. Not later than 10:30 AM on the date of bond issuance organization, bidders must provide the Stock Exchange with bid information according to process and bid template provided by the Stock Exchange. Each bidder or each customer of the bidder of competitive bid is allowed to place up to five (05) bid levels on a bid form for each code of bond to be bid. Each bid level includes the interest rate offered (rounded to 2 decimal places) and the quantity of corresponding bonds bidded for. If a bidder purchases bonds for his/her customers, the bidder must provide the customer's name, interest rate and corresponding quantity of bonds each customer bids for.

3. Not later than fifteen (15) minutes from the final time of registration for bidding prescribed in Clause 2 of this Article, the Stock Exchange shall open the bid, consolidate bid information and send it to the State Treasury.

4. Based on consolidated bid information provided by the Stock Exchange, the State Treasury shall determine the interest rate of each bond code and inform it to the Stock Exchange for determining the bond bidding result as regulated in Article 21 herein.

5. Upon the end of each bond issuance session, the Stock Exchange shall electronically send bidding results to bidders via the electronic bond bidding system.

6. Upon the end of the bond issuance session, the Stock Exchange shall inform the State Treasury and Vietnam Securities Depository of issuance results (including bidding result regulated in Clause 5 of this Article and the additional issuance of bonds immediately after the bidding session as regulated in Article 22 herein, if any) according to contents regulated in Appendix 4 enclosed herewith. At the same time, the Stock Exchange shall publish the bond issuance results as prescribed in Clauses 1, 2 Article 45 herein on its website.

Article 21. Determining bidding result

1. Grounds to determine the bid-winning interest rate, coupon rate, winning quantity and the bond’s selling price:

a) The quantity of bonds offered by the issuer;

b) Interest rate and quantity of bonds bidded for;

c) The bracket of bond interest rate as regulated in Article 5 herein.

2. Methods of determining bid-winning interest rate:

a) Fixed-rate tender:

The bid-winning interest rate shall be the highest interest rate offered which is commonly applied to all bidders (for both competitive and non-competitive bids) and considered in the ascending order of the interest rates provided that it satisfies the two (02) following conditions:

- It does not exceed the interest rate bracket imposed by the Ministry of Finance;

- The accrued quantity of bonds issued to at up to the bid-winning interest rate does not exceed the quantity of bonds offered by the issuer.

b) Variable-rate tender:

- The bid-winning interest rate applied to each successful bidder of competitive bid shall be the interest rate offered by such bidder and considered in the ascending order of the interest rates provided that it satisfies the two (02) following conditions:

+ The weighted average of bid-winning interest rates does not exceed the interest rate bracket imposed by the Ministry of Finance;

+ The accrued quantity of bonds issued at up to the highest bid-winning interest rate does not exceed the quantity of bonds offered by the issuer.

- The bid-winning interest rate applied to bidders of non-competitive bid shall be the weighted average of bid-winning interest rates and rounded off to two (02) decimal places.

3. Methods of determining the quantity of bonds issued to each successful bidder:

a) Bonds issued through competitive bid:

The quantity of bonds issued to each bidder of competitive bid shall be equal to the quantity of bonds bid by that bidder. At the highest bid-winning interest rate, if the accrued quantity of bonds bidded for at up to the highest bid-winning interest rate exceeds the quantity of bonds offered by the issuer, the amount of bonds offered that remains after removing the amount of bonds bidded for at lower interest rates shall be issued to bidders at the highest bid-winning interest rate in proportion to their quantities of bonds they bid for. The quantity of bonds issued to each bidder shall be rounded to the nearest ten thousand.

b) Bonds issued under the form of combination of competitive bid and non-competitive bid:

- The quantity of bonds issued to each bidder of competitive bid shall be equal to the quantity of bonds bidded for by such bidder. At the highest bid-winning interest rate, if the accrued quantity of bonds bidded for at up to the highest bid-winning interest rate exceeds the quantity of bonds offered by the issuer, the amount of bonds offered that remains after removing the amount of bonds bidded for at lower interest rates and the amount of bonds issued to bidders of non-competitive bid shall be issued to bidders at the highest bid-winning interest rate in proportion to quantities of bonds they bid for. The quantity of bonds issued to each bidder shall be rounded to the nearest ten thousand.

- The quantity of bonds issued to each bidder of non-competitive bid shall be equal to the quantity of bonds such bidder bids for. If total amount of bonds bided for exceeds the limit prescribed in Clause 3 Article 19 herein, the amount of bonds issued to each bidder of non-competitive bid shall be in proportion to the amount of bonds such bidder bids for and rounded to the nearest ten thousand.

- If none of bidders of competitive bid is successful, bonds shall not be issued to bidders of non-competitive bid.

4. Examples of determination of the bid-winning interest rate, coupon rate and issuance of bonds to successful bidders are provided in Appendix 5 enclosed herewith.

5. Total amount received from sale of bonds is calculated by multiplying the amount of bonds sold to bondholders and the selling price per bond.

6. The selling price per zero-coupon bond which is newly or additionally issued shall be determined by the following formula:

Where:

GG = The selling price per bond (rounded to the nearest Dong)

MG = Face value of bond

a = Number of days from the date of settlement made by the bondholder to the next interest payment date as assumed

E = Total days of an interest payment period according to the assumption that the payment is made

t = Number of interest payment periods as assumed from the bond settlement date to the maturity date

Lt = Interest rate of bond issued to the bondholder (%/year)

7. Calculation of the selling price per fixed-rate bond the interest on which is paid periodically at equal intervals:

a) Initially issued bonds:

- The selling price per bond is calculated by the following formula:

GG =

b) Additional bonds:

- If the bond settlement date falls before or on the final date of registration of the next interest payment period, the selling price per bond is calculated by the following formula:

GG =

- If the bond settlement date falls after the final date of registration of the next interest payment period, the selling price per bond is calculated by the following formula:

Where:

GG = The selling price per bond (rounded to the nearest Dong)

MG = Face value of bond

L_c = Coupon rate (%/year) The coupon rate of the initially issued bond shall be the weighted average of bid-winning interest rates applied to bidders of competitive bid and rounded to 1 decimal place. For additional bonds, L_c is the coupon rate of the type of outstanding bonds for which bonds are additionally issued.

k = Number of periodical payments of interest within 1 year

d = Actual days between the date of settlement made by the bondholder and the first interest payment date from the bond settlement date

E = Actual days in the interest payment period in which bonds are additionally issued

t = Number of payments of bond interest between the date of settlement made by the bondholder and the maturity date

Lt = Interest rate of bonds issued to the bondholder (%/year)

8. Calculation of the selling price per fixed-rate bond the interest on which is paid periodically where the first interest payment period is shorter or longer than the next ones:

a) Calculation of interest on a bond:

- The interest on a bond in the first interest payment period which is shorter than the next one shall be calculated by the following formula:

- The interest on a bond in the first interest payment period which is longer than the next one shall be calculated by the following formula:

- The interest on a bond in the next interest payment periods shall be calculated by the following formula:

Where:

GL₁ = Interest on a bond in the first interest payment period (rounded to the nearest Dong)

GL_n = Interest on a bond in the next interest payment period (rounded to the nearest Dong)

MG = Face value of bond

L_c = Coupon rate (%/year) The coupon rate of the initially issued bond shall be the weighted average of bid-winning interest rates applied to bidders of competitive bid and rounded to 1 decimal place. For additional bonds, L_c is the coupon rate of the type of outstanding bonds for which bonds are additionally issued.

k = Number of periodical payments of interest within 1 year

a1 = Actual days between the bond settlement date and the first interest payment date from the bond settlement date

a2 = Number of days from the date of settlement made by the bondholder to the payment date of ordinary interest date as assumed

E = Total days of an ordinary interest payment period according to the assumption that the payment is made

b) Calculation of selling price per initially issued bond:

- The selling price per bond with interest paid periodically and the first interest payment period shorter than the next one is calculated by the following formula:

- The selling price per bond with interest paid periodically and the first interest payment period longer than the next one is calculated by the following formula:

GG = The selling price per bond (rounded to the nearest Dong)

GL₁ = Interest on a bond payable in the first interest payment period, rounded to the nearest Dong (using the formula in Point a stated above)

MG = Face value of bond

L_t = Interest rate of bond issued to the bondholder (%/year)

Lc = Coupon rate (%/year) which is the weighted average of bid-winning interest rates applied to bidders of competitive bid and rounded to 1 decimal place. Additional bonds:

k = Number of periodical payments of interest within 1 year

a1 = Actual days between the bond settlement date and the first interest payment date from the bond settlement date

a2 = Number of days from the date of settlement made by the bondholder to the payment date of ordinary interest date as assumed

E = Total days of an ordinary interest payment period according to the assumption that the payment is made

t = Number of interest payments between the date of settlement made by the bondholder and the maturity date of bond

- Additional bonds:

+ If the bond settlement date falls before or on the final date of bond registration for receiving the bond interest in the first interest payment period, the selling price per bond is calculated by the formula which is employed to calculate the selling price per initially issued bond with the first interest payment period shorter or longer than the next one.

+ If the bond settlement date falls after the final date of bond registration for receiving the bond interest in the first interest payment period, the selling price per bond is calculated by the formula which is employed to calculate the selling price per bond which has equal interest payment periods and is additionally issued as regulated in Clause 7 of this Article.

Article 22. Additional issuance of bonds after the bidding session

1. Based on the bidding result prescribed in Article 20 herein, the State Treasury shall decide whether additional bonds are issued after the bidding session or not and inform the Stock Exchange as regulated in Clause 2 of this Article.

2. Procedures for additional issuance of bonds after the bidding session:

a) Rules for additional issuance of bonds after the bidding session:

- The additional issuance is only applied to bond codes with bid-winning results at the bidding session held at 10:30 AM according to the notification of bidding results as prescribed in Clause 5 Article 20 herein.

- The amount of additional bonds shall be decided by the State Treasury provided that it shall not exceed 30% of the quantity of bonds offered by the issuer of each bond code as specified in the notification of bond issuance prescribed in Clause 1 Article 20 herein.

- The interest rate of bonds additionally issued of each bond code is equal to the bid-winning interest rate in case of fixed-rate tender or the weighted average of bid-winning interest rates in case of variable-rate tender and rounded to 2 decimal places.

b) The State Treasury shall send a notification to the Stock Exchange of decision on additional issuance of bonds after the bidding session. Notification contents: code of bond to be additionally issued, quantity of additional bonds, interest rate of bonds additionally issued and time of registration for purchasing additional bonds. The notification of additional issuance of bonds after the bidding session must be made at the same time the notification of interest rate of bonds issued is made as regulated in Clause 4 Article 20 herein.

c) The Stock Exchange shall electronically send notification of additional issuance of bonds after the bidding session to bidders via the electronic bond bidding system.

d) Conditions to be satisfied to purchase additional bonds after the bidding session:

- The buyer must be the bidder as regulated by Ministry of Finance;

- The buyer has won the bid for any bond code at the bidding session as prescribed in Clause 5 Article 20 herein.

dd) The bidder who satisfies all of conditions prescribed in Point d of this Clause may decide whether to carry out registration for purchase of additional bonds after the bidding session or not. A bidder may purchase and own additional bonds himself/herself or purchase for his/her customers.

e) The quantity of additional bonds purchased by each bidder (including the amount of additional bonds purchased for himself/herself or for his/her customers) for each bond code shall not exceed the quantity of bonds additionally issued after the bidding session according to the notification of the State Treasury as regulated in Points b, c of this Clause.

g) Information registered for purchase of additional bonds includes:

- Codes of additional bonds;

- Quantity of additional bonds of each bond code to be purchased;

- Customer’s name.

h) Methods of determining the quantity of additional bonds issued to bidders:

- If the total amount of additional bonds registered for purchase by bidders is lower than or equal to the quantity of bonds additionally issued after the bidding session according to the notification of the State Treasury as regulated in Point b of this Clause, the amount of bonds additionally issued to each bidder shall be equal to the amount of additional bonds registered for purchase by that bidder.

- If the total amount of additional bonds registered for purchase by bidders exceeds the quantity of bonds additionally issued after the bidding session according to the notification of the State Treasury as regulated in Point b of this Clause, the ratio of bonds additionally issued to each bidder shall be calculated according to the ratio of the amount of additional bonds registered by that bidder to total amount of additional bonds registered for purchase of each bond code.

- The quantity of bonds additionally issued to each bidder shall be rounded to the nearest ten thousand.

i) Based on the registration for purchase of additional bonds, the notification of additional issuance of bonds of the State Treasury and rules for determining the quantity of additional bonds issued, the Stock Exchange shall determine the quantity of bonds additionally issued to each bidder and send notification thereof to the State Treasury.

k) Upon the end of additional issuance of bonds, the Stock Exchange shall electronically send the notification of issuance of additional bonds to bidders who register for purchase of bonds additionally issued after the bidding session via the electronic bond bidding system.

Section 2. ISSUANCE OF BONDS THROUGH UNDERWRITING

Article 23. Rules of bond underwriting

1. The bond issue is underwritten by one or more underwriters (forming an underwriter syndicate).

2. The State Treasury shall select the main underwriter to represent the underwriter syndicate in negotiation and agreement on the quantity, term, interest rate and underwriting fee for each bond issue in accordance with regulations herein.

3. Term of bond issued through underwriting is 5 years or more as regulated by the Ministry of Finance.

Article 24. Rights and obligations of main underwriter

1. Rights

a) Be the unique legal representative of the rights and obligations of the underwriter syndicate to conduct negotiation and reach an agreement with the State Treasury upon the bond underwriting.

b) Have the right to distribute bonds issued through underwriting under the underwriting contract signed with the State Treasury;

c) Receive underwriting fee as negotiated and agreed upon with the State Treasury in compliance with regulations herein;

d) Have the right to select participants in the underwriter syndicate and make decision on the underwriting fee paid to them.

2. Obligations

a) Assume responsibility to distribute the entire amount of bonds within a period of time specified in the underwriting contract signed with the State Treasury. In case the underwritten bonds are not distributed all to investors, the main underwriter shall buy the whole remaining amount of undistributed bonds;

b) Make payment of bond purchase amount as prescribed in Clause 1 Article 35 herein;

c) Submit report to the State Treasury on the amount of bonds actually distributed in the bond settlement date;

d) Discharge other obligations as regulated in the principle contract and the underwriting contract signed with the State Treasury.

Article 25. Eligibility requirements for the main underwriter

1. Be a commercial bank or a securities company which is established and operates under the law of Vietnam, and is licensed to provide securities underwriting services in compliance with relevant laws.

2. Have the charter capital actually contributed at least equal to the legal capital as regulated relevant laws.

3. Have an operating period of not less than three (03) years. If it is an acquiring institution or an institution established after partial or full division, or consolidation, its operating period shall include the operating period before it is partially or fully divided, acquired or consolidated.

4. Have experience in the area of securities underwriting.

5. Submit application for becoming the main underwriter.

Article 26. Procedures for selecting main underwriter and underwriter syndicate

1. At least fifteen (15) working days prior to the planned date of issuing bonds through underwriting, the State Treasury must publish on the websites of Ministry of Finance, the State Treasury and the Stock Exchange information about the plan for bond underwriting and invitation for registration as main underwriter. Information to be published:

a) Information about the bonds to be issued:

- Terms and conditions of bond (currency, term, face value, date of bond issuance organization, issue date, bond settlement date, intended date of paying bond interest, maturity date, account of the State Treasury for receiving bond payment, methods of principal and interest payment, bond code granted by Vietnam Securities Depository);

- Quantity of bonds to be issued.

b) Information about the selection of main underwriter:

- Eligibility requirements and standards applied to the main underwriter as regulated in Article 25 herein.

- Time limit, address, templates and form of receiving application for registration as the main underwriter.

2. Any organization that meets all of eligibility requirements and desires to become the main underwriter shall send a sealed application as regulated in the notification of the State Treasury. The application includes:

a) The application form for the main underwriter using the template provided by the State Treasury;

b) The proposed plan for bond underwriting which includes the following contents:

- Analysis, comments and forecast about the bond market developments and the possibility of bond issuance through underwriting;

- Implementation plan for expected bond underwriting: plan for selection of participants in the underwriter syndicate, method and time for implementation, estimated quantity, interest rate of bonds issued and proposed underwriting fee;

- Commitments made by the underwriter.

c) Documents proving the eligibility for becoming the main underwriter, including:

- The copy of business license (copy made from the master register, copy certified by a competent authority or uncertified copy presented with its original for comparison);

- Audited financial statements of three (03) preceding years;

- Documents proving the organization’s experience in the area of securities underwriting.

3. Within five (05) working days from the end of deadline for receiving applications for registration as main underwriter, the State Treasury shall open the received applications, evaluate and select one (01) qualified organization to act as the main underwriter according to the following grounds:

a) Standards and conditions of the main underwriter as regulated in Article 25 herein;

b) Capacity, experience and ability to play the role of the main underwriter for the bond issue according to the plan proposed by the organization in Point b Clause 2 of this Article.

4. The State Treasury shall provide written notification of result of selection of the main underwriter to applicants and publish such selection result on the websites of Ministry of Finance, the State Treasury and the Stock Exchange.

5. The State Treasury and the selected main underwriter shall agree upon the contents and sign the principle contract for bond underwriting using the template of contract provided in Appendix 6 enclosed herewith.

6. Based on the principle contract signed with the State Treasury, the main underwriter shall select members of the underwriter syndicate.

7. Participants in the underwriter syndicate must be organizations or individuals that are established and operates under the law of Vietnam or legally reside in Vietnam, and licensed to purchase Government bonds as regulated by law, including Vietnam Social Security Administration and Deposit Insurance of Vietnam.

8. Participants in the underwriter syndicate shall have rights and obligations as agreed upon with the main underwriter.

Article 27. Negotiating and organizing the bond underwriting

1. Within five (05) working days from the date on which the principle contract is signed with the State Treasury, the main underwriter shall provide the State Treasury with the written notification of the list of participants in the underwriter syndicate for bond underwriting according to the template provided in Section 1 Appendix 7 enclosed herewith and the agreement of the underwriter syndicate signed by all participants in the underwriter syndicate using the template provided in Section 2 Appendix 7 enclosed herewith.

2. Based on the written notification of the main underwriter and the bracket of interest rates and underwriting fee imposed by the Ministry of Finance, the State Treasury shall carry out a negotiation with the main underwriter on the quantity, terms and provisions of bonds (term, interest rate of bonds issued, issue date, bond settlement date, and bond’s selling price), the underwriting fee and other relevant contents.

3. The State Treasury shall, based on negotiation results, enter into the underwriting contract with the main underwriter on the date of bond issuance organization. The template of the underwriting contract is provided in Section 3 Appendix 7 enclosed herewith. The underwriting contract shall be used as the legal ground for determining rights and obligations of the main underwriter; rights and obligations of the State Treasury in accordance with regulations herein.

4. Within the working day after the date on which the underwriting contract is signed, the State Treasury shall report the underwriting results to Vietnam Securities Depository and the Stock Exchange; publish the underwriting results on the websites of the Ministry of Finance, the State Treasury and the Stock Exchange.

5. The amount of money received from the bond issuance shall be determined in accordance with regulations in Clause 5 Article 21 herein.

6. The selling price per bond is calculated according to the following regulations:

a) The selling price per zero-coupon bond shall be determined in accordance with regulations in Clause 6 Article 21 herein;

b) The selling price per fixed-rate bond shall be determined in accordance with regulations in Clauses 7, 8 Article 21 herein;

c) The selling price per floating-rate bond shall be determined in accordance with the notification of the Ministry of Finance as regulated in Clause 5 Article 4 herein.

Section 3. ISSUANCE OF BONDS THROUGH BROKERAGE

Article 28. Rules for issuing bonds through brokerage

1. The State Treasury shall select organizations satisfying requirements specified herein to act as issuing agents and agents for payment of bond principal and interest.

2. Before the issuance of bonds through brokerage, the State Treasury shall formulate the plan for bond issuance through brokerage and submit it to the Ministry of Finance for approval.

Article 29. Eligibility requirements applied to issuing agent

1. Be a commercial bank which is lawfully established and operates in Vietnam;

2. Have the charter capital actually contributed at least equal to the legal capital as regulated relevant laws;

3. Have an operating period of not less than 3 years;

4. Maintain an operating network to ensure the issuance of bonds upon the request of the State Treasury at each bond issue;

5. Submit an application for registration as issuing agent.

Article 30. Procedures for selecting and signing agency contract

1. At least 20 working days prior to the date of issuing bonds through brokerage, the State Treasury must publish on the websites of Ministry of Finance, the State Treasury and the Stock Exchange information about the plan for issuance of bonds through brokerage and invitation for registration as issuing agents. Information to be published:

a) Information about the bonds to be issued:

- Terms and provisions of bond (currency, term, date of bond issuance organization, issuance form, method of bond principal interest payment);

- Quantity of bonds to be issued.

b) Information about the selection of issuing agent:

- Form of agent: issuing agent or issuing agent cum settlement agent;

- Eligibility requirements applied to the issuing agent as regulated in Article 29 herein;

- Templates, time limit, address and form of receiving applications for registration as issuing agent. The applicant may submit the application directly at the State Treasury or send the application through registered mail service to the address notified by the State Treasury. The application must be sealed before it is submitted to the State Treasury.

2. Any organization that meets all of eligibility requirements mentioned in Article 29 herein and desires to become the issuing agent shall send an application to the State Treasury in compliance with the notification prescribed in Clause 1 of this Article. The application includes:

a) The application form using the template provided in Section 1 Appendix 8 enclosed herewith;

b) The plan for bond issuance which includes the following contents:

- Analysis, comments and forecast about the bond market developments and the possibility of bond issuance through brokerage;

- The implementation plan for the bond issue through brokerage;

- Proposed brokerage fee, and proposed fee charged by settlement agent.

c) Documents proving the applicant’s eligibility for becoming the issuing agent, including:

- The copy of business license (copy made from the master register, copy certified by a competent authority or uncertified copy presented with its original for comparison);

- Audited financial statements of three (03) preceding years;

- Information about its operating network and infrastructure to ensure the issuance of bonds upon the request of the State Treasury.

d) The application must be sealed before it is submitted to the State Treasury in compliance with prevailing regulations.

3. Within five (05) working days from the end of deadline for receiving applications for registration as issuing agent, the State Treasury shall establish a team to open the received applications, evaluate and select one or some qualified applicants to act as issuing agents according to the following grounds:

a) The satisfaction of eligibility requirements for issuing agent as regulated in Article 29 herein;

b) The applicant’s capacity and ability to play the role of an issuing agent;

c) The proposed brokerage fee.

4. The State Treasury shall provide written notification of result of selection of issuing agents to applicants and publish such selection result on the websites of Ministry of Finance, the State Treasury and the Stock Exchange.

5. Based on the application for registration as the issuing agent and the interest rate bracket imposed by the Ministry of Finance, the State Treasury shall carry out a negotiation with the issuing agent on the quantity, terms and provisions of bonds (term, interest rate of bonds issued, issue date, bond settlement date, and bond’s selling price), the brokerage fee and other relevant contents.

6. The State Treasury shall, based on negotiation results, enter into the agency contract with the issuing agent. The template of the agency contract is provided in Section 2 Appendix 8 enclosed herewith. The agency contract shall be used as the legal ground for determining rights and obligations of the issuing agent and those of the State Treasury in accordance with regulations herein.

7. The amount of money received from the bond issuance shall be determined in accordance with regulations in Clause 5 Article 21 herein.

8. The selling price per bond is calculated according to the following regulations:

a) The selling price per zero-coupon bond shall be determined in accordance with regulations in Clause 6 Article 21 herein;

b) The selling price per fixed-rate bond shall be determined in accordance with regulations in Clauses 7, 8 Article 21 herein;

c) The selling price per floating-rate bond shall be determined in accordance with the notification of the Ministry of Finance as regulated in Clause 5 Article 4 herein.

Article 31. Organizing the bond issuance

1. The issuing agent shall organize the bond issuance according to terms and provisions of bonds specified in the agency contract signed with the State Treasury.

2. Within thirty (30) working days from the end of the bond issue through brokerage, the State Treasury shall submit a report on issuance results to the Ministry of Finance in conformity with regulations in Clause 2 Article 42 herein.

Section 4. RETAILING BONDS VIA THE SYSTEM OF STATE TREASURY

Article 32. Rules for bond issuance

1. The retailing method is employed to issue bonds directly to investors that are domestic and foreign organizations or individuals, including Vietnam Social Security Administration and Deposit Insurance of Vietnam.

2. The State Treasury shall itself or select provincial-level or district-level State Treasuries affiliated to the State Treasury to organize the bond issue and make bond principal and interest payment for each bond issue.

3. The State Treasury shall formulate the plan for bond issuance through retailing as regulated in Clause 1 of this Article and submit it to the Ministry of Finance for approval before organizing the bond issuance.

4. Bonds shall be issued under the forms of certificates, book entries or electronic data.

5. If bonds are issued under the form of certificates, the State Treasury shall assume responsibility to design template and print bond certificates.

6. The amount of money received from the bond issuance shall be determined in accordance with regulations in Clause 5 Article 21 herein.

7. The selling price per bond is calculated according to the following regulations:

a) The selling price per zero-coupon bond shall be determined in accordance with regulations in Clause 6 Article 21 herein;

b) The selling price per fixed-rate bond shall be determined in accordance with regulations in Clauses 7, 8 Article 21 herein;

c) The selling price per floating-rate bond shall be determined in accordance with the notification of the Ministry of Finance as regulated in Clause 5 Article 4 herein.

Article 33. Bond issuance procedure

1. Bonds directly issued at the State Treasury:

a) Based on the plan for bond issuance approved by Ministry of Finance, the State Treasury shall, at least four (04) working days prior to the issue date, publish information about the planned bond issue on the websites of the Ministry of Finance, the State Treasury and the Stock Exchange. Information to be published:

- Issue date, settlement date, date of interest payment and maturity date of bonds to be issued;

- Quantity and terms of bonds to be issued;

- Buyers;

- Coupon rate;

- Form of bond;

- Method of principal and interest payment;

b) Organizations and individuals that want to buy bonds shall send bond purchase registration forms to the State Treasury;

c) The State Treasury shall, based on bond purchase registration forms sent by potential buyers, request the Ministry of Finance to grant decision on issuance of bonds through retailing;

d) Pursuant to the decision on issuance of bonds through retailing by the Ministry of Finance, bond buyers shall make transfer of money to the account designated by the State Treasury;

dd) Based on money transfer receipts, the State Treasury shall enter the bond purchase amount into accounts as budget revenues in compliance with regulations of the Law on state budget, and carry out procedures for certification of bond ownership for buyers as regulated.

2. Bonds issued at a provincial-level or district-level State Treasury which is affiliated to the State Treasury:

a) At least 10 working days prior to the issue of bonds through retailing, the State Treasury must publish detailed information about the bond issue on the websites of Ministry of Finance, the State Treasury and the Stock Exchange and on other mass media means. Information to be published:

- Quantity and terms of bonds to be issued;

- Buyers;

- Coupon rate;

- Form of bond;

- Method of principal and interest payment;

- Date and place of issue.

b) If a buyer pays cash for purchased bonds, the buyer must carry out procedures for payment of bond purchase amount at the place of issue of the State Treasury. The State Treasury shall base on the amount of money paid by the buyer to carry out procedures for issuing bonds under terms and provisions of the bond issue to that buyer.

c) If a buyer wants to pay for bonds in transfer, the buyer shall make transfer of money to the account of the State Treasury as notified by the State Treasury. Based on the money transfer receipt and the bank’s credit note sent to the State Treasury, the State Treasury shall issue bonds under prescribed terms and provisions of the bond issue to the buyer.

d) Based on amount of money paid for bonds to the State Treasury, the State Treasury shall carry out procedures for entering such amount into accounts as budget revenue in compliance with regulations of the Law on state budget, and deliver bond certificate to the buyer (if bonds are issued under the form of certificates) or carry out procedures for certification of bond ownership (if bonds are issued under the form of book entries or electronic data) for buyer.

dd) Pursuant to regulations in Points a, b and c of this Clause and based on management requirements, the State Treasury shall provide guidance on detailed procedure for issuance of bonds through retailing at a provincial-level or district-level State Treasury which is affiliated to the State Treasury.

Article 34. Keeping, maintaining, pledging and transferring bonds

1. Bondholders shall themselves keep their bonds acquired through retailing method. The bondholder may also request the State Treasury at the place of bond issue to keep his/her bonds purchased. The State Treasury shall carry out procedures for keeping bonds for the client without collection of keeping fee.

2. The pledge and transfer of bonds issued through retailing via the system of State Treasury shall be performed in accordance with regulations in Clause 1 Article 8 of the Decree No. 01/2011/ND-CP The transfer of book-entry bonds which are not registered or deposited at Vietnam Securities Depository shall be carried out at the State Treasury where such bonds are issued in accordance with the State Treasury's guidance.

Chapter IV

BOND SETTLEMENT

Article 35. Bond settlement

1. Bonds issued through bidding or underwriting:

a) Not later than 14:00 PM of the bond settlement date as notified by the State Treasury, bidders (if bonds are issued through bidding) or the main underwriter (if bonds are issued through underwriting) must ensure that total amount used to buy bonds (including amount of money used to buy bonds of customers of bidders or participants in the main underwriter) have been paid and credited in the account designated by the State Treasury. If a customer or participant in the underwriter syndicate fails to make payment for bonds, the successful bidder or the main underwriter shall assume responsibility to make full payment for bonds purchased by that customer or participant.

b) An investor who buys bonds through a bidder or the main underwriter may make payment for purchased bonds through such bidder or the main underwriter, or make direct transfer of money to the account designated by the State Treasury provided that the transfer must be made within the time limit prescribed in Point a of this Clause. In case an investor who buys bonds makes bond payment through a bidder or the main underwriter who shall make transfer to the account designated by the State Treasury, the bidder or the main underwriter must record sufficient information about the bond code, the bondholder, the quantity of purchased bonds and total amount paid by such bondholder.

c) The State Treasury shall send a written certification of completion of bond payment by the successful bidder or the main underwriter to Vietnam Securities Depository for depositing bonds.

2. With regard to bonds issued through brokerage, the issuing agent shall, based on time limit defined in the agency contract and the quantity of bonds issued, make transfer of proceeds from the sales of bonds to the account designated by the State Treasury.

3. With regard to bonds issued through retailing via the system of State Treasury, the bond settlement shall be made according to the following methods:

a) Make payment for bonds in cash immediately when buying bonds at the place of issue announced by the State Treasury;

b) Make payment for bonds by transfer to the account designated by the State Treasury where bonds are issued.

Article 36. Penalty for late payment

1. The State Treasury may charge interest on late payment for bonds if the buyer is one (01) or more day late on payment for bonds in comparison with the bond settlement date notified by the State Treasury. Penalty for late payment shall be calculated according to the following provisions:

a) The penalty payable for late payment is calculated by the following formula:

Where:

P    = Penalty for late payment

MG = Face value of bond

N    = The amount of bonds issued but for which payment is not yet made

L_o   = Overnight interest rate imposed by the State Bank at the first day of late payment (%/year)

k    = Number of interest payments within a year (for bonds with periodical interest payment); or k = 1 (for zero-coupon bonds)

n    = Actual days of late payment as from the prescribed settlement date

E   = Actual days of an interest payment period in which the late payment occurs (for bonds with periodical interest payment); or E shall equal to actual days of the year in which bonds are issued (for zero-coupon bonds).

b) The State Treasury shall give a written notification to the entity that is late on payment for bonds, which includes information about the penalty for late payment, time limit for payment and account for receiving penalty for late payment.

c) The entity that is late on payment for bonds must make payment of penalty for late payment to the state budget according to the notification given by the State Treasury. The penalty for late payment shall be recorded as budget revenue in accordance with regulations of the Law on state budget and its instructional documents.

2. With regard to bonds issued through bidding or underwriting, after five (05) working days from the bond settlement date, if the successful bidder or the main underwriter fails to make bond settlement, the State Treasury shall cancel the issuance result with respect of the quantity of bonds for which the payment is not yet made and send written notification to the successful bidder or the main underwriter, the Stock Exchange and Vietnam Securities Depository.

Chapter V

REGISTERING, DEPOSITING AND LISTING BONDS

Article 37. Registering and depositing bonds

1. Bonds issued through bidding or underwriting shall be registered and deposited at Vietnam Securities Depository.

2. Bonds issued through brokerage or retailing shall be registered and deposited at Vietnam Securities Depository upon the request of the State Treasury at each issue.

3. Based on the written notification of bond issuance result of the State Treasury and the Stock Exchange, Vietnam Securities Depository shall carry out the registration of bonds issued. Not later than the working day following the bond settlement date, bonds must be registered.

4. Vietnam Securities Depository shall send a written notification of bond registration to the Stock Exchange for listing bonds.

5. Bonds shall be deposited on the bondholder’s account by Vietnam Securities Depository upon the receipt of the written certification of the State Treasury certifying the payment of bond purchase amount.

6. Vietnam Securities Depository shall cancel the registration of bonds for which purchase amount is not made according to the written notification of cancellation of bond issuance result made by the State Treasury.

Article 38. Listing and trading bonds

1. Bonds issued through bidding or underwriting shall be listed and traded at the Stock Exchange.

2. Bonds issued through brokerage or retailing shall be listed and traded at the Stock Exchange upon the request of the State Treasury at each issue.

3. Bonds shall be listed by the Stock Exchange according to the written notification of bond registration of Vietnam Securities Depository. Not later than the working day following the bond settlement date, bonds must be listed.

4. From the second working day after the bond settlement date, listed bonds may be traded.

5. The Stock Exchange shall cancel the listing of bonds for which payment is not made according to the written notification of cancellation of bond issuance result given by the State Treasury and the written notification given by Vietnam Securities Depository of cancellation of registration of bonds for which payment is not made.

Chapter VI

PAYMENT OF BOND PRINCIPAL AND INTEREST, ISSUANCE FEES AND SETTLEMENT FEES

Article 39. Payment of bond principal and interest

1. Funds for paying bond principal and interest when bonds mature shall be covered by the central-government budget. If the date of bond principal and interest payment falls on days off or public holidays as regulated, the bond principal and interest shall be paid on the next working day.

2. Procedure for paying principal and interest on bonds issued through bidding or underwriting:

a) Not later than the 25^th day of every month, Vietnam Securities Depository must send a notification to the State Treasury of the principal and interest payable in the next month and required settlement date;

b) Not later than 11:30 AM on the date of principal and interest payment, the State Treasury must ensure that total amount of bond principal and interest payable in the settlement date has been transferred and credited on the account designated by Vietnam Securities Depository;

c) Within the date of principal and interest payment, Vietnam Securities Depository shall, via depository members, make transfer of bond principal and interest to bondholders defined in the final date of registration;

d) If the State Treasury makes transfer of the bond principal and interest to the account designated by Vietnam Securities Depository after the time limit prescribed in Point b Clause 2 of this Article, the State Treasury must incur penalty for late payment as announced by Vietnam Securities Depository. Vietnam Securities Depository shall calculate and transfer penalty for late payment to accounts of bondholders in corresponding with their proportion of owned bonds. The penalty for late payment shall be calculated in accordance with regulations in Article 36 herein;

dd) In case the State Treasury makes transfer of the bond principal and interest to the account designated by Vietnam Securities Depository on schedule as prescribed in Point b Clause 2 of this Article but Vietnam Securities Depository makes transfer of received bond principal and interest to accounts of bondholders after the prescribed date of principal and interest payment, Vietnam Securities Depository shall pay interest on late payment to bondholders. The interest on late payment shall be calculated in accordance with regulations in Article 36 herein;

3. Procedure for paying principal and interest on bonds issued through brokerage:

a) Procedure for paying principal and interest on bonds which are registered and deposited at Vietnam Securities Depository shall comply with regulations in Clause 2 of this Article;

b) Procedure for paying principal and interest on bonds which are not registered and deposited at Vietnam Securities Depository shall comply with regulations in the agency contract signed by and between the State Treasury and the issuing agent.

4. Procedure for paying principal and interest on bonds issued through retailing via the system of State Treasury:

a) Procedure for paying principal and interest on bonds which are registered and deposited at Vietnam Securities Depository shall comply with regulations in Clause 2 of this Article;

b) Procedure for paying principal and interest on bonds which are not registered and deposited at Vietnam Securities Depository shall comply with guidance of the State Treasury.

Article 40. Issuance fees and principal and interest payment fees

1. Funds for paying issuance fees, fees for making payment of bond principal and interest, and fees for printing bond certificates (if any) shall be covered by the central-government budget.

2. Fees for issuing, and paying principal and interest on bonds issued through underwriting or bidding shall be paid to relevant organizations according to the following provisions:

a) 0.025% of nominal value of a bond issued through bidding shall be paid to the Stock Exchange;

b) An amount not exceeding 0.1% of nominal value of a bond issued through underwriting shall be paid to the main underwriter. Based on this maximum fee, the market developments and the complexity of each underwritten bond issue (quantity and terms of bonds to be issued), the State Treasury shall carry out an agreement with the main underwriter on the underwriting fee paid to the main underwriter;

c) 0.02% of the principal and interest amount paid through Vietnam Securities Depository shall be paid to Vietnam Securities Depository;

d) 0.004% of nominal value of a bond issued shall be paid to the State Treasury.

3. Fees for issuing, and paying principal and interest on bonds issued through retailing shall be paid to relevant organizations according to the following provisions:

a) 0.1% of total nominal value of bonds issued, excluding costs of printing bond certificates (if any) shall be paid to the State Treasury if bonds are issued through provincial-level or district-level State Treasuries; issuance fee shall not be collected if the central-level State Treasury issues bonds directly to buyers upon decisions of Minister of Finance.

b) 0.02% of the principal and interest amount shall be paid to Vietnam Securities Depository if the principal and interest on bonds are paid through Vietnam Securities Depository.

4. Fees for issuing, and paying principal and interest on bonds issued through brokerage shall be paid to relevant organizations according to the following provisions:

a) An amount not exceeding 0.1% of nominal value of a bond issued through brokerage shall be paid to the issuing agent. Based on this maximum fee, the market developments and the complexity of each bond issue (quantity and terms of bonds to be issued), working contents (organization of bond issuance, payment of bond principal and interest), the State Treasury shall carry out an agreement with the issuing agent on the issuance fee and fee for making payment of bond principal and interest. This fee excludes the costs of printing bond certificates (if any).

b) 0.02% of the principal and interest amount shall be paid to Vietnam Securities Depository if the principal and interest on bonds are paid through Vietnam Securities Depository.

5. Using the issuance fees and principal and interest payment fees:

a) The State Treasury may use the collected issuance fees to cover the following expenditures:

- Expenditure for issuing bonds and making bond settlement via the system of the State Treasury (if bonds are issued through retailing);

- Expenditure for purchase and development of software, technologies and equipment to serve the bond issuance and settlement;

- Expenditure for periodical upgrade or unexpected repair of machinery, equipment and software;

- Expenditure for advertising and propagation activities relating to the bond issuance and settlement;

- Expenditure directly paid at each bidding session or underwritten issue of bond;

- Expenditure for bond market research and development;

- Expenditure for organizing training classes, seminars, meetings, surveys to learn experience in Government bond market;

- Expenditure for annual meeting to finalize bond issuance activities;

- Expenditure for unscheduled and regular commendation and reward for entities relating to the issuance of Government bonds in compliance with regulations of the State Treasury;

- Expenditure for office stationeries;

- Other expenditures to serve the bond issuance and settlement.

b) Fees for organizing bidding for bond issuance shall be revenues of the Stock Exchange and fees for making bond principal and interest payment shall be revenues of Vietnam Securities Depository. The Stock Exchange and Vietnam Securities Depository shall assume responsibility to manage and use collected fees in compliance with their financial mechanism as regulated by relevant laws.

Chapter VII

ACCOUNTING, REPORTING AND INFORMATION PUBLISHING

Article 41. Accounting

The State Treasury, the Stock Exchange, Vietnam Securities Depository and relevant organizations shall assume responsibility to record revenues from bond issuance, payments of bond principal and interest, issuance fees and settlement fees as regulated herein into accounts in accordance with regulations of the Law on state budget, the Law on accounting and relevant instructional documents.

Article 42. Report on each issue

1. With respect of bonds issued through underwriting, the State Treasury shall, within 5 working days from the end of the bond issue, submit a report to the Ministry of Finance. Reporting contents include:

a) Quantity, terms and conditions of issued bonds;

b) Underwriter syndicate: Number of participants in the underwriter syndicate, quantity and interest rate offered by each participant;

c) Issuance results: Underwriter, bond quantity, interest rate of bonds issued, bond’s selling price.

2. With respect of bonds issued through brokerage and retailing, the State Treasury shall, within 30 working days from the end of the bond issue, submit a report to the Ministry of Finance.  Reporting contents include:

a) Quantity, terms and conditions of issued bonds;

b) Issuance results: selected issuing agent, quantity, interest rate of bonds issued and payment of brokerage fee and issuance fee.

3. The State Treasury may submit reports electronically or by hand as requested by Ministry of Finance at each period.

Article 43. Report on bond issuance and payment of bond principal and interest

1. Not later than the 10^th day every month, the State Treasury shall submit report to Ministry of Finance on bond issuance and payment of bond principal and interest. Reporting contents include:

a) Total amount of bonds issued in the month sort by terms and issuance methods;

b) Total amount of bond principal and interest paid in the reporting month;

c) Estimated amount of bond principal and interest paid in the next month.

2. Vietnam Securities Depository must send quarterly report to the Ministry of Finance and the State Treasury on number of bonds owned by domestic investors and by foreign investors, and number of bonds on depository account of the Operations Center of the State Bank using the template provided in Appendix 9 enclosed herewith.

3. Reports shall be electronically or by hand submitted as requested by Ministry of Finance at each period.

Article 44. Report by bidder

1. Quarterly report:

a) Reporting contents: The bidder's operations on the bond market in the preceding quarter, forecast about bond investment demand and interest rates in the following 3 months. The report template is provided in Appendix 10 enclosed herewith;

b) Time of submission: Quarterly report must be submitted within ten (10) days from the end of the quarter;

c) Reporting form: electronic mail;

d) Place of receipt: Email address as announced by Ministry of Finance.

2. Annual report:

a) Reporting contents are specified in the report template provided in Appendix 11 enclosed herewith. To be specific:

- The satisfaction of eligibility requirements for bidder as prescribed in Clause 1 and Article 14 herein;

- Evaluation and ranking of bidder as prescribed in Clause 1 Article 15 herein;

- The bidder's operations on the bond market;

- Forecast about bond investment demand and interest rates in the following year;

b) Reporting period: from November 01 of the previous year to October 31 of the current year;

c) Time of submission: From November 01 to November 10 every year;

d) Reporting form: Written report;

dd) Place of receipt: Department of Banking and Financial Institutions affiliated to Ministry of Finance – address: No. 28 Tran Hung Dao St., Hoan Kiem District, Hanoi.

Article 45. Information publishing

1. The Stock Exchange must publish bidding results on its website within the date of bond issuance organization. Information to be published:

a) Bond code;

b) Term;

c) Issue date, maturity date, date of principal and interest payment;

d) Quantity of bonds for bidding, quantity of bonds bid, quantity of bid-winning bonds, amount of money paid for bonds acquired from winning bid;

dd) The lowest interest rate offered, the highest one, interest rate of bonds issued and coupon rate;

e) Number of bidders and total number of bid forms.

2. The Stock Exchange must publish on its website within the date of bond issuance organization information about additional issuance of bonds after the bidding session, including:

a) Bond code;

b) Term;

c) Issue date, maturity date, date of principal and interest payment;

d) Registered quantity of additional bonds for purchase, quantity of bonds additionally issued and amount of money received from the additional issuance of bonds;

dd) Interest rate of bonds issued and coupon rate;

e) Number of bidders registering for purchase of additional bonds.

3. a) With respect of bonds registered at Vietnam Securities Depository, Vietnam Securities Depository shall, not later than December 31 every year, coordinate with the Stock Exchange in publishing information about the date of bond principal and interest payment in the next year on their websites. Information to be published:

a) Code of bond on which principal and interest paid in the year;

b) Date of principal and interest payment of each bond code;

c) The final date of bond registration in the year of each bond code.

4. With respect of bonds which are issued through brokerage or retailing and are not registered at Vietnam Securities Depository, the State Treasury shall, not later than December 31 every year, publish information about the bond principal and interest payment in the next year on its website.

Chapter VIII

RESPONSIBILITY OF RELEVANT ORGANIZATIONS

Article 46. Responsibility of Ministry of Finance

1. Stipulate the bracket of bond interest rates applied to each period or each issue.

2. Instruct and publish rights and obligations of bidders; evaluation criteria and proportion of each criterion for evaluating/ ranking bidders in each period.

3. Select and announce the list of bidders in each period in conformity with the bond market developments.

4. Evaluate and publish ranking of bidders.

Article 47. Responsibility of the State Treasury

1. Formulate and announce the plan for bond issuance for the whole year and quarterly plan for bond issuance in accordance with regulations herein.

2. Organize the bond issuance, and make payment of bond principal and interest, issuance fee, and fee charged by agent for bond principal and interest payment in accordance with regulations herein.

3. Formulate the Statute providing guidance on bond issuance and bond settlement through retailing via the system of the State Treasury, and submit it to the Ministry of Finance for approval before promulgation.

4. Sign principle contract, underwriting contract, agency contract and ensure the adherence to provisions in the contracts and regulations herein by the main underwriter and issuing agent.

5. Fully comply with reporting and accounting regulations on bond issuance as regulated herein.

6. Coordinate with Vietnam Securities Depository and the Stock Exchange in publishing information in compliance with regulations herein.

Article 48. Responsibility of the Stock Exchange

1. Formulate regulations on bidding for bond issuance, announcement of bid prices/offering prices applied to bidders.

2. Organize bidding for issuing bonds in accordance with regulations herein.

3. Provide necessary figures and/or documents relating to bidding activities in accordance with regulations herein and/or upon the request of Ministry of Finance.

4. Retain and manage information relating to bidding sessions for bond issuance in accordance with prevailing policies and regulations.

5. Coordinate with the State Treasury and Vietnam Securities Depository in publishing information in compliance with regulations herein.

6. List or cancel listing of bonds in accordance with regulations herein.

Article 49. Responsibility of Vietnam Securities Depository

1. Effectuate or cancel the registration and depositing of bonds in accordance with regulations herein.

2. Make payment of bond principal and interest on schedule as regulated herein.

3. Provide the State Treasury with intended codes granted to initially issued bonds to inform to bidders and publish on the website of the Stock Exchange in compliance with regulations herein.

4. Provide necessary figures and/or documents relating to managing sectors in accordance with regulations herein and upon the request of Ministry of Finance (if any).

Chapter IX

IMPLEMENTATION

Article 50. Transitional clause

With respect of bond issues through retailing in 2015 before the entry into force of this Circular, the bond registration, depositing of bonds at Vietnam Securities Depository and listing of bonds at the Stock Exchange shall be carried out upon the request of the State Treasury at each issue.

Article 51. Implementation Clause

1. This Circular shall come into force from September 15, 2015.

2. This Circular supersedes the following documents:

a) The Circular No. 17/2012/TT-BTC dated February 08, 2012 by Ministry of Finance providing guidance on the issuance of Government bonds in the domestic market.

b) The Circular No. 203/2013/TT-BTC dated December 24, 2013 by Ministry of Finance on amendments to the Circular No. 17/2012/TT-BTC dated February 08, 2012 providing guidance on the issuance of Government bonds in the domestic market.

Article 52. Implementation

1. Chief of Office of Ministry of Finance, Director of Department of Banking and Financial Institutions, General Director of the State Treasury, General Director of the Stock Exchange, General Director of Vietnam Securities Depository and heads of relevant units shall be responsible for implementing this Circular.

2. The State Treasury and relevant units are recommended to report difficulties that arise during the implementation of this Circular to the Ministry of Finance for guidance./.