A number of articles of Circular No. 107/2020/TT-BTC, which govern the transaction of repurchasing with a term of government bonds from temporarily idle state funds of the State Treasury, have been amended and supplemented by Circular No. 12/2023/TT-BTC, which was recently published by the Ministry of Finance (State Treasury).
As a result, in order for the State Treasury to accept government bonds in a repurchase transaction with a term of government bonds, the State Treasury’s government bonds must be listed on the Stock Exchange. Additionally, the remaining term of government bonds is amended to reflect the number of days (in actual days) between the first transaction payment date (T+2) and the maturity date of the government bonds.
The State Treasury and the commercial bank signed the contract appendix for each transaction, which was based on the framework contract that had already been signed.
According to Circular No. 12/2023/TT-BTC, the contract appendix’s principal contents include information on redeemed government bonds with the following terms: government bond code, the bond’s remaining term, hedging ratio, and discount rate (%/year); Information about the first transaction: Interest on repurchase with a term of government bonds, the term for repurchasing government bonds, and the interest rate for repurchasing with a term of government bonds; date of the initial transaction’s payment; list price, the quantity of government bonds exchanged, and the initial transaction’s value, all of which are associated with each government bond code; the quantity of government bonds exchanged in accordance with each government bond code, as well as the second transaction’s payment date and amount; other relevant contents.
According to Circular No. 12/2023/TT-BTC, the State Treasury’s professional advisor on electronic transactions, the framework contract, and contract appendix are concluded in paper documents (with full seal and direct signature of the competent person representing the parties to perform the contract) or electronic documents (digitally signed by a competent person and digitally signed by an agency or organization in accordance with the law).
According to Circular No. 12/2023/TT-BTC, which revised and updated a number of regulations regarding the procedure of repurchase transactions involving government bonds, commercial banks must send a sure offer order between 9:00 am and 10:00 am on T day. The Stock Exchange’s trading system ensures that the entire offer volume for the redemption of government bonds at all terms does not exceed the commercial bank’s outstanding balance (orders sent after 10:30 am will not be effective).
Specifically, for each type of government bond redemption term, each commercial bank is allowed to offer up to 5 offers for each type of government bond redemption term, ensuring that the total offer volume does not exceed the total amount of State Treasury requests to offer price for that type of term; Each offer includes the interest rate of the repurchase offer for the term (to 2 decimal places); 1 or more government bond codes are used as collateral in the repurchase transaction with a term of government bonds, the offer volume is calculated according to the par value of the respective government bonds for each government bond code and other relevant contents; The offer volume calculated at par value of government bonds of each offer is not lower than the minimum level announced by the State Treasury from time to time.
The State Treasury began offers on the Stock Exchange’s debt instrument trading system at the same time, from 10:30 to 10:45 a.m. on T. The State Treasury decides the outcomes of the repurchase of public bonds with terms in line with this Circular based on the offers received on the debt instrument trading system of the Stock Exchange.
Government bond nominal interest is governed by laws that have been imposed by the Ministry of Finance. If the State Treasury gets the nominal interest of a bond during the period when it is being repurchased, it is then responsible for paying back the nominal interest. are issued to commercial banks in accordance with the law governing government bonds, on which the State Treasury earns minimal interest.
Government bond nominal interest repayment takes place outside of the Stock Exchange’s debt instrument trading system; the timing of the repayment must be mutually agreed upon by the parties and cannot be more than 5 working days after the date on which bond interest was actually paid.
The State Treasury is responsible for paying the late payment penalty interest rate indicated in this Circular to commercial banks for the number of days of late payments in cases where nominal interest is transferred late.
According to Circular No. 12/2023/TT-BTC, for regulations on information disclosure, the State Treasury shall publish information on the website of the State Treasury’s electronic schedule of repurchase transactions with the expected term of the next trading week; at the same time, the State Treasury shall provide information to the Stock Exchange for posting on the Website of the Stock Exchange. This must be done at the latest on the last working day of the week preceding the week of the transaction.
The results of the repurchase of government bonds with the term in the previous month (volume, average repurchase interest rate of government bonds), rights corresponding to the type of term, and information provided to the Stock Exchange for posting on the Stock Exchange Website must be publicly disclosed on the State Treasury’s website by the latest on the 10th of each month.
The results of the repurchase of government bonds with term in the previous month (volume, average repurchase interest rate of government bonds) rights that correspond to the type of term shall be published on the State Treasury’s website at the latest on the 10th of each month. At the same time, the State Treasury shall provide information to the Stock Exchange for posting on the Stock Exchange’s website.
The Ministry of Finance also updated and supplemented a number of new regulations on the first transaction value, term redemption interest, and second transaction value in Circular No. 12/2023/TT-BTC.; Nominal compounding price, nominal compounding interest, and a list price of government bonds; handling the situation in which commercial banks fail to pay the State Treasury; duties of relevant organizations, etc.
Circular No. 12/2023/TT-BTC takes effect from May 4, 2023.