Circular No. 12/2023/TT-BTC amending and supplementing certain Articles of Circular No. 107/2020/TT-BTC dated December 21, 2020, issued by the Minister of Finance guiding the repurchase transactions with maturity of Government Bonds from the temporarily idle state treasury funds of the State Treasury

CIRCULAR

Amending and supplementing certain articles of Circular No.
107/2020/TT-BTC dated December 21, 2020 issued by the Minister of Finance
guiding transactions to repurchase government bonds with maturity from the State Treasury's temporarily idle funds
of the National Treasury

On the basis of the Law on State Budget Management dated June 25, 2015;

Pursuant to the Securities Law promulgated on November 26, 2019;

Pursuant to Decree No. 24/2016/NĐ-CP dated April 5, 2016 of the Government stipulating the management regime for state treasury funds;

Pursuant to Decree No. 95/2018/NĐ-CP dated June 30, 2018 of the Government stipulating the issuance, registration, custody, listing, and trading of government debt instruments on the securities market;

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017, issued by the Government, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the General Director of the State Treasury;

The Minister of Finance hereby issues this Circular amending and supplementing certain articles of Circular No. 107/2020/TT-BTC dated December 21, 2020 issued by the Minister of Finance guiding transactions to repurchase government bonds with maturity from the State Treasury's temporarily idle funds of the National Treasury.

Article 1. Amending and supplementing certain articles of Circular No. 107/2020/TT-BTC dated December 21, 2020 issued by the Minister of Finance guiding transactions to repurchase government bonds with maturity from the State Treasury's temporarily idle funds of the National Treasury as follows:

1. Amend and supplement Clause 5 of Article 3 as follows:

"5. Remaining maturity of government bond: Is the remaining time (in actual days) from the first transaction settlement date (T+2) to the maturity date of the government bond."

2. Amend and supplement Clause 1, Article 5 as follows:

"1. Is a government bond issued by the National Treasury and listed on the Stock Exchange."

3. Amending and supplementing some clauses of Article 9 as follows:

a) Amending Point a Clause 4 as follows:

"a) Information about the government bond being repurchased with maturity: code of government bond, remaining maturity of government bond, risk mitigation ratio, discount rate (% per annum)."

b) Amending Point c Clause 4 as follows:

"c) Details of the second transaction: Second transaction settlement date; quantity of government bonds traded corresponding to each government bond code and value of the second transaction."

c) Amending and supplementing Clause 5 as follows:

"5. Framework contracts and annexes shall be concluded in writing (with full seals and signatures of authorized representatives of both parties) or electronically (signed by authorized persons and signed by organizations according to the law), in compliance with regulations on electronic transactions in the operations of the National Treasury."

4. Amending and supplementing some clauses of Article 10 as follows:

a) Amend and supplement Clause 2 as follows:

"2. From 9:00 to 10:30 on day T, commercial banks send firm bid orders according to the trading rules of the Stock Exchange, ensuring that the total volume of bids at all remaining maturity periods does not exceed the remaining credit limit for transactions of that bank (bids sent after 10:30 have no effect), specifically:

a) For each type of remaining maturity period, each commercial bank may submit up to five (05) bid orders for each type of remaining maturity period, ensuring that the total volume of bids does not exceed the total volume requested by the National Treasury for that type of remaining maturity period.

b) Each bid order includes the interest rate for the bid to repurchase with maturity (to two decimal places); one (01) or more government bond codes used as collateral in the repurchase transaction with maturity, the bidding volume calculated based on the face value of the government bond for each government bond code, and other related contents.

c) The bidding volume calculated based on the face value of the government bond for each bid order must not be lower than the minimum level announced by the National Treasury during each period."

b) Amend and supplement Clause 3 as follows:

"3. From 10:30 to 10:45 on day T, the National Treasury will open bidding tables on the trading system of the Stock Exchange. Based on the bid orders received through the trading system of the Stock Exchange, the National Treasury will determine the results of the repurchase transaction with maturity according to Article 11 of this Circular."

5. Amending and supplementing some clauses of Article 12 as follows:

a) Amend and supplement Clause 1 as follows:

"1. The value of the first transaction of the National Treasury corresponding to each bid order is determined according to the formula:

V₁= ΣV_i

Where, Vi is the value of the first transaction corresponding to each government bond code of the selected bid order, calculated as follows:

V_i= GG x (1 - H) x KL

Where:

V_i: Value of the first transaction corresponding to government bond code i of the selected bid order (rounded down to the nearest dong).

GG: Gross nominal yield price of one (01) bond of government bond code i, calculated according to Article 13 of this Circular.

H: Risk mitigation ratio converted to a decimal number, set at 5% of the gross nominal yield price of the government bond for government bonds with remaining maturity under five (05) years and 10% of the gross nominal yield price of the government bond for government bonds with remaining maturity of five (05) years or more.

KL: Quantity of government bonds traded corresponding to the government bond code i (equal to the repurchase quantity of that government bond code calculated based on face value/face value of the bond).”đượ TPCP i (= the volume of repurchase transactions with maturity for that TPCP code divided by the face value of the bond).”

b) Amend and supplement Clause 3 as follows:

“3. The value of the second transaction of the National Treasury corresponding to each bid order is determined according to the following formula:

V₂= V2₁+ L

Where, V2 is the value of the second transaction.”

6. Amend and supplement Article 13 as follows:

“Article 13. Gross nominal yield price, accumulated nominal yield, and quoted price of government bonds

1. Gross nominal yield price:

a) Determining the price of one (01) non-coupon paying government bond

a.1) For non-coupon paying government bonds with remaining maturity over one (01) year:

Where:

GG = Price of one (01) government bond (rounded down to the nearest dong).

MG = Face value of the government bond.

a = Number of days from the first transaction settlement date to the next interest payment date assumed.

E = Actual number of days in the interest payment period assumed for the government bond being repurchased with maturity.

t = Number of interest payment periods from the first transaction settlement date to the maturity date of the government bond.

Lt = Discount rate of the government bond (% per annum), which is the yield to maturity (YTM) published by the Stock Exchange on the day of the repurchase transaction for the government bond code used in the transaction on the Stock Exchange's electronic information page (yield curve section).

a.2) For non-coupon paying government bonds with remaining maturity of one (01) year or less:

Where:

GG = Price of one (01) government bond (rounded down to the nearest dong).

MG = Face value of the government bond.

a = Number of days from the first transaction settlement date to the maturity date of the government bond.

E = Actual number of days in the interest payment period assumed for the government bond being repurchased with maturity.

Lt = Discount rate of Government Bonds (%/year), which is the yield to maturity (YTM) announced by the Securities Trading Exchange on the day of the scheduled purchase of Government Bonds for the specific bond code used in the transaction, published on the Securities Trading Exchange's electronic information page (yield curve section).

b) Determining the price of one (01) Government Bond with a fixed nominal interest rate, periodic interest payments, and equal interest payment periods:

b.1) For Government Bonds with remaining terms exceeding one (01) year:

- In the case where the first transaction settlement date falls before or on the last registration date of the next interest payment period, the price of one (01) Government Bond is determined as follows:

- In the case where the first transaction settlement date falls after the last registration date of the next interest payment period, the price of one (01) Government Bond is determined as follows:

Where:

GG = Price of one (01) government bond (rounded down to the nearest dong).

MG = Face value of the government bond.

Lc = Nominal interest rate of Government Bonds (%/year).

k = Number of periodic interest payments in one year.

d = Actual number of days between the first transaction settlement date and the next interest payment date.

E = Actual number of days in the interest payment period of the Government Bond being purchased.

t = Number of interest payments between the first transaction settlement date and the maturity date of the Government Bond.

Lt = Discount rate of Government Bonds (%/year), which is the yield to maturity (YTM) announced by the Securities Trading Exchange on the day of the scheduled purchase of Government Bonds for the specific bond code used in the transaction, published on the Securities Trading Exchange's electronic information page (yield curve section).

c) Determining the price of one (01) Government Bond with a fixed nominal interest rate, periodic interest payments, and the first interest payment period shorter or longer than subsequent periods:

c.1) For Government Bonds with remaining terms exceeding one (01) year:

- In the case where the first transaction settlement date falls before or on the last registration date to receive the interest payment of the first interest payment period:

+ In the case where the actual number of days from the first transaction settlement date to the interest payment date of the first interest payment period is shorter than one (01) regular interest payment period, the price of one (01) Government Bond is determined as follows:

+ In the case where the actual number of days from the first transaction settlement date to the interest payment date of the first interest payment period is longer or equal to one (01) regular interest payment period, the price of one (01) Government Bond is determined as follows:

Where:

GG = Price of one (01) government bond (rounded down to the nearest dong).

GL1 = The amount of interest payment of one (01) Government Bond for the first interest payment period according to the terms of the Government Bond at its initial issuance.

MG = Face value of the government bond.

Lt = Discount rate of Government Bonds (%/year), which is the yield to maturity (YTM) announced by the Securities Trading Exchange on the day of the scheduled purchase of Government Bonds for the specific bond code used in the transaction, published on the Securities Trading Exchange's electronic information page (yield curve section).

Lc = Nominal interest rate of Government Bonds (%/year).

k = Number of periodic interest payments in one year.

a1 = Actual number of days between the first transaction settlement date and the first interest payment date of the Government Bond according to the terms of the Government Bond at its initial issuance.

a2 = Actual number of days from the first transaction settlement date to the regular interest payment date according to the assumption.

E = Actual number of days in the regular interest payment period according to the terms of the Government Bond at its initial issuance.

t = Number of interest payments between the first transaction settlement date and the maturity date of the Government Bond.

- In the case where the first transaction settlement date falls after the last registration date to receive the interest payment of the first interest payment period, the price of one (01) Government Bond is determined according to the provisions of subpoint b.1 of point b of this clause.

c.2) For Government Bonds with remaining terms of one (01) year or less, the price of one (01) Government Bond is determined according to the provisions of subpoint b.2 of point b of this clause.

d) The Ministry of Finance announces the method of determining the combined nominal interest rate in cases where the nominal interest rate of Government Bonds is a floating rate upon occurrence.

2. Combined nominal interest:

a) Determining the combined nominal interest on the ex-dividend date:

a.1) For Government Bonds with a fixed nominal interest rate, periodic interest payments, and equal interest payment periods:

Where:

Cc: Combined nominal interest on the ex-dividend date.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

Dn: Number of days from the first transaction settlement date to the nearest subsequent nominal interest payment date or to the maturity date of the Government Bond.

E: Actual number of days in the current interest payment period of the Government Bond.

a.2) For Government Bonds with a fixed nominal interest rate, periodic interest payments, and the first interest payment period shorter than subsequent periods:

- Determining the combined nominal interest on the ex-dividend date of the first interest payment period as follows:

Where:

Cc: Combined nominal interest on the ex-dividend date.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

D1: Number of days from the initial issuance of the Government Bond to the nearest subsequent nominal interest payment date.

Dn: Number of days from the first transaction settlement date to the nearest subsequent nominal interest payment date or to the maturity date of the Government Bond.

E2: Actual number of days in the regular interest payment period according to the assumption with the first transaction settlement date occurring.

- Determining the combined nominal interest on the ex-dividend date of subsequent interest payment periods according to the formula at subpoint a.1 of this point.

a.3) For Government Bonds with a fixed nominal interest rate, periodic interest payments, and the first interest payment period longer than subsequent periods:

- In the case where the first transaction settlement date occurs before or on the regular nominal interest payment date according to the assumption of the first interest payment period, the combined nominal interest of the first interest payment period is determined as follows:

Where:

Cc: Combined nominal interest on the ex-dividend date.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

D2: Number of days from the initial issuance of the Government Bond to the nearest subsequent regular nominal interest payment date according to the assumption.

Dn: Number of days from the first transaction settlement date to the nearest subsequent regular nominal interest payment date according to the assumption.

E1: Actual number of days in the regular interest payment period according to the assumption with the initial issuance of the Government Bond occurring.

- In the case where the first transaction settlement date occurs after the regular nominal interest payment date according to the assumption of the first interest payment period, the combined nominal interest of the first interest payment period is determined as follows:

Where:

Cc: Combined nominal interest on the ex-dividend date.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

D2: Number of days from the initial issuance of the Government Bond to the nearest subsequent regular nominal interest payment date according to the assumption.

E1: Actual number of days in the regular interest payment period according to the assumption with the initial issuance of the Government Bond occurring.

Dn: Number of days from the first transaction settlement date to the nearest subsequent nominal interest payment date or to the maturity date of the Government Bond.

E2: Actual number of days in the regular interest payment period according to the assumption with the first transaction settlement date occurring.

- Determining the combined nominal interest on the ex-dividend date of subsequent interest payment periods according to the formula at subpoint a.1 of this point.

b) Determining the combined nominal interest on the non-ex-dividend date:

b.1) For Government Bonds with a fixed nominal interest rate, periodic interest payments, and equal interest payment periods:

Where:

Cx: Combined nominal interest on the non-ex-dividend date.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

Dn: Number of days from the first transaction settlement date to the nearest subsequent nominal interest payment date or to the maturity date of the Government Bond.

E: Actual number of days in the current interest payment period of the Government Bond.

b.2) For Treasury Bonds (TPCP) with a fixed nominal interest rate, paying interest periodically, and having the first interest payment period shorter or longer than subsequent periods.

- Determine the accumulated nominal interest for the trading day without interest rights of the first interest payment period:

Where:

Cx: Accumulated nominal interest on the trading day without interest rights.

MG: Face value of Government Bonds.

Rc = Lc/k, where Lc is the nominal interest rate of Government Bonds (%/year), k is the number of interest payments in a year.

Dn: Number of days from the first transaction settlement date to the nearest subsequent nominal interest payment date or to the maturity date of the TPCP.

E2: Actual number of days in the regular interest payment period according to the assumption with the first transaction settlement date occurring.

- Determine the accumulated nominal interest for the trading day without interest rights of subsequent interest payment periods according to the formula at subpoint b.1 of this point.

c) In the case where the first transaction settlement date coincides with the nominal interest payment date, the accumulated nominal interest is determined as zero.

3. Listed price of Treasury Bonds (TPCP)

a) Determine the listed price on the trading day with interest rights:

G = GG - Cc

Where:

G: Listed price (rounded down to the nearest dong).

GG: Nominal interest-accumulated price of one (01) TPCP.

Cc: Combined nominal interest on the ex-dividend date.

b) Determine the listed price on the trading day without interest rights:

G = GG + Cx

Where:

G: Listed price (rounded down to the nearest dong).

GG: Nominal interest-accumulated price of one (01) TPCP.

Cx: Combined nominal interest on the non-ex-dividend date.

c) Determine the listed price in the case where the first transaction settlement date coincides with the nominal interest payment date:

G = GG

Where:

G: Listed price.

GG: Nominal interest-accumulated price of one (01) TPCP.

d) For TPCP that do not pay periodic interest:

G = GG

Of which

G: Listed price.

GG: Nominal interest-accumulated price of one (01) TPCP.”

7. Amend and supplement Clause 2, Article 15 as follows:

“2. In the event that the State Treasury (KBNN) and Commercial Banks (NHTM) cannot agree on adjusting the payment time or after the payment deadline specified in Clause 1 of Article 2 of this Decree, if the NHTM still fails to make the payment to the KBNN, the KBNN retains the TPCP until maturity and receives the principal and interest of the TPCP to offset the entire obligation to be paid (the value of the second transaction and late payment penalties up to the last day before the maturity date of the TPCP); any remaining amount (if any), the KBNN will return to the NHTM within five (05) working days from the maturity date of the TPCP.”

8. Add Article 15a following Article 15 as follows:

“Article 15a. Nominal Interest Rate of Treasury Bonds (TPCP)

1. In the case where the State Treasury (KBNN) receives the nominal interest of TPCP during the term of repurchase of TPCP, the KBNN has the responsibility to refund the received nominal interest of TPCP to the Commercial Banks (NHTM) based on the TPCP code that the KBNN received the nominal interest. The refund of the nominal interest of TPCP shall be carried out outside the debt instrument trading system of the Stock Exchange; the repayment date of the nominal interest shall be agreed upon by both parties but must not be later than five (05) working days from the date of actual interest payment on the bond.

2. In the case of delayed transfer of nominal interest, the KBNN shall be responsible for paying late payment penalties to the NHTM for the number of days of delay at the late payment interest rate stipulated in Clause 2 of Article 14 of this Circular.”

9. Amend and supplement Article 17 as follows:

“Article 17. Disclosure of Information

1. At the latest on the last working day of the week immediately preceding the week of the transaction, the KBNN publishes information on its electronic information website about the schedule of the upcoming week's repurchase transactions of TPCP; simultaneously, it provides information to the Stock Exchange to publish on the Stock Exchange's electronic information portal.

2. At the latest on the 10th day of each month, the KBNN publishes information on its electronic information website about the results of the previous month's repurchase transactions of TPCP (volume, average weighted repurchase interest rate corresponding to the type of term); simultaneously, it provides information to the Stock Exchange to publish on the Stock Exchange's electronic information portal.”

10. Amend and supplement some clauses of Article 18 as follows:

a) Supplement Point c of Clause 1 of Article 18 as follows:

“c) Provide information on the schedule of the upcoming week's repurchase transactions of TPCP and the results of the previous month's repurchase transactions of TPCP to the Stock Exchange in accordance with Article 17 of this Circular.”

b) Supplement Points c and d of Clause 2 of Article 18 as follows:

“c) Announce information on the schedule of the upcoming week's repurchase transactions of TPCP and the results of the previous month's repurchase transactions of TPCP in accordance with Article 17 of this Circular.

d) Regularly provide monthly information on repurchase transactions of TPCP in the market (including: repurchase term, repurchase interest rate, TPCP code, listed price, execution price, discount rate, value of the first transaction, value of the second transaction) to the KBNN for market evaluation purposes.”

Article 2. Transitional Provisions

Repurchase transactions of TPCP with the first transaction settlement date before the effective date of this Circular and the second transaction settlement date after the effective date of this Circular shall continue to be governed by the provisions of Circular No. 107/2020/TT-BTC dated December 21, 2020, issued by the Minister of Finance guiding repurchase transactions of TPCP from idle state treasury funds temporarily available for use by the KBNN.

Article 3. Effectiveness and Implementation

1. This Circular takes effect from May 4, 2023.

2. The KBNN, relevant agencies, units, organizations, and individuals are responsible for implementing this Circular./.