CIRCULAR

Guidelines on the issuance of government-guaranteed bonds

___________________

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

Pursuant to the Securities Law dated June 29, 2006 and the Law Amending and Supplementing Certain Provisions of the Securities Law dated November 24, 2010;

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government on the functions, tasks, and organizational structure of the Ministry of Finance;

BASED ON Decree No. 01/2011/NĐ-CP dated January 5, 2011 of the Government on the issuance of government bonds, government-guaranteed bonds, and local government bonds;

BASED ON Decree No. 15/2011/NĐ-CP dated February 16, 2011 of the Government on the granting and management of government guarantees;

The Ministry of Finance guides the issuance of government-guaranteed bonds as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the issuance of government-guaranteed bonds (hereinafter referred to as guaranteed bonds) in the domestic market and international market.

Article 2. Issuing Subjects

The issuer of guaranteed bonds is a business enterprise, state policy banks, and financial and credit organizations (hereinafter collectively referred to as the issuer) that fall within the scope eligible for government guarantees under Clause 2, Article 3 of Decree No. 01/2011/NĐ-CP dated January 5, 2011 of the Government on the issuance of government bonds, government-guaranteed bonds, and local government bonds (hereinafter referred to as Decree No. 01/2011/NĐ-CP).

Article 3. Purpose of Issuance

Guaranteed bonds are issued for investment in programs and projects as stipulated in Clause 2, Article 4 of Decree No. 01/2011/NĐ-CP.

Article 5. Conditions for Issuance

1. For Enterprises

a) Must meet all conditions for issuing guaranteed bonds as prescribed in Clause 1, Article 16 of Decree No. 01/2011/NĐ-CP when issuing bonds in the domestic market;

b) Must fully meet the conditions for issuing guaranteed bonds as prescribed in Article 40 of Decree No. 01/2011/ND-CP when issuing bonds in the international market.

2. For state policy banks issuing in the domestic market

a) Must meet all conditions for issuing guaranteed bonds as prescribed in Clause 2, Article 16 of Decree No. 01/2011/NĐ-CP;

b) The volume of issuance of guaranteed bonds must be within the limit of government guarantees approved by the Prime Minister for each period.

3. For Financial and Credit Organizations Implementing Targeted Credit Programs of the State

a) Issuing guaranteed bonds in the domestic market to implement targeted credit programs of the State according to each decision of the Prime Minister for each program and project;

b) Must meet all issuance conditions prescribed in Article 34 of the Law on Public Debt Management and Clause 2, Article 16 of Decree No. 01/2011/NĐ-CP of the Government.

Article 5. Conditions and terms of bonds

In addition to the conditions and terms prescribed in Article 6 of Decree No. 01/2011/NĐ-CP, the issuer of guaranteed bonds must comply with the following provisions:

1. Issuance volume:

The issuance volume of each tranche is decided by the issuer but shall not exceed the issuance guarantee limit for each period approved by the competent authority as prescribed in this Circular.

2. Issuance Interest Rate

a) The interest rate for issuing guaranteed bonds in the domestic market is determined by the issuer for each issuance tranche but shall not exceed the interest rate range announced by the Ministry of Finance for each issuance tranche or period;

b) The interest rate for issuing guaranteed bonds in the international market is determined by the issuer for each issuance tranche based on the issuance plan approved by the Prime Minister and the market situation at the time of issuance.

Article 6. Repurchase and exchange of bonds

1. The issuer of guaranteed bonds may repurchase bonds early to reduce debt obligations. The repurchase of bonds must ensure the following principles:

a) There must be a repurchase plan approved by the competent authority. The approval level for the issuance plan is also the approval level for the repurchase plan;

b) Transparency, fairness, and effectiveness.

2. The issuer of guaranteed bonds can carry out bond exchanges to reduce debt obligations or to restructure debts. The exchange of bonds must ensure the following principles:

a) There must be an exchange plan approved by the competent authority. The approval level for the issuance plan is also the approval level for the bond exchange plan;

b) The exchange plan must be reviewed and approved in writing by the Ministry of Finance;

c) Transparency and effectiveness;

3. The issuer may apply the organizational methods for repurchasing and exchanging government bonds to repurchase and exchange guaranteed bonds;

4. The issuer is responsible for the effectiveness of the repurchase and exchange of guaranteed bonds and has the responsibility to report to the Ministry of Finance as prescribed in this Circular.

Chapter II

APPROVAL OF THE PROPOSAL FOR ISSUANCE OF GUARANTEED BONDS

Section 1

GUARANTEED BONDS ISSUED BY ENTERPRISES

Article 7. Documents for requesting guarantee issuance

1. For issuance of guaranteed bonds on the domestic market

a) The issuer's application for issuing guaranteed bonds according to the model attached to this Circular;

b) The issuance plan for guaranteed bonds. In addition to the contents prescribed in Clause 1, Article 17 of Decree No. 01/2011/NĐ-CP, the issuance plan for bonds must include the following additional contents:

- Information on the investment program/project and its implementation status, including: investment decision by the competent authority; total investment amount; the field of investment within the list of projects/programs eligible for consideration of guarantees as decided by the Prime Minister during each period; plan and progress of investment; sources of funds, including the guaranteed bond capital and the implementation status of the program/project up to the date of submission;

- Proposed issuance plan for guaranteed bonds: total issuance volume divided by bond maturity periods and issuance schedule based on the progress and disbursement of the program/project. In case the proposed issuance is divided into multiple tranches over several years, the issuance plan must be detailed for each year;

c) Annual financial statements of the three (03) consecutive years prior to the year of bond issuance, audited by the State Audit Agency or an independent auditing organization legally permitted to operate in Vietnam according to the law on corporate bond issuance;

In case the enterprise submits the issuance application before April 1st each year, the annual financial statement of the year immediately preceding the year of bond issuance may be unaudited but must be approved by the Board of Directors, the Board of Members, or the Chairman of the company according to the company's charter;

d) Approval and consent documents for the issuance plan of corporate bonds by the competent authority according to the laws on corporate bond issuance;

d) Documents proving compliance with the conditions for issuing guaranteed bonds as prescribed in Article 4 of this Circular, including:

- Certified copies of the Business Registration Certificate of the enterprise and the Charter of the enterprise's organization and operation;

- Documents proving that the program and project have completed investment and construction procedures in accordance with laws on investment and construction;

- Documents proving that the enterprise has invested at least twenty percent (20%) of its own capital in the program and project;

- Other documents proving that the enterprise meets the conditions for issuing corporate bonds under the law on issuing corporate bonds.

2. For issuing guaranteed bonds to the international market

a) The issuer's application for issuing guaranteed bonds according to the model attached to this Circular;

b) The issuance plan for guaranteed bonds. In addition to the contents prescribed in Article 41 of Decree No. 01/2011/NĐ-CP, the issuance plan for bonds to the international market must include additional contents as specified in sub-clause b of Clause 1 of this Article;

c) The documents prescribed in sub-clauses c, d, đ of Clause 1 of this Article.

Article 8. Approval Procedures and Formalities guarantee issuance

1. The enterprise submits one (01) set of documents prescribed in Article 7 of this Circular to the Ministry of Finance for checking the completeness and validity of the documents and requesting supplementary documents (if necessary). If the documents are complete, the Ministry of Finance will notify the enterprise to submit five (05) sets of documents for the formalities to review and provide opinions on the issuance plan for guaranteed bonds.

2. Within thirty (30) working days from the date of receiving all documents as prescribed in Clause 1 of this Article, the Ministry of Finance shall take the lead in coordinating with relevant ministries and sectors to review and provide opinions on the issuance plan for guaranteed bonds. The review includes:

a) The objects and conditions for issuing bonds as stipulated in this Circular;

b) Financial plans for the program and project and bond issuance plans;

c) Plans for using and managing the issued bond funds, and plans for arranging funds to pay off principal and interest on bonds;

d) The business's capacity and financial situation including: equity capital, liabilities, debt repayment ability, profit;

đ) The annual guarantee limit approved by the Prime Minister.

3. Based on the consolidated opinions of relevant ministries and sectors, the Ministry of Finance shall report to the Prime Minister for consideration and approval of the policy and limit of guarantee issuance. In case the enterprise does not meet the conditions for guarantee issuance, the Ministry of Finance shall notify the enterprise in writing and state the reasons.

4. After receiving the Prime Minister's approval document on the policy and limit of guarantee issuance, the Ministry of Finance shall notify the enterprise in writing of the maximum limit allowed for issuing guaranteed bonds to implement according to this Circular.

Section 2

CORPORATE BONDS ISSUED BY POLICY BANKS IN THE DOMESTIC MARKET

Article 9. Application Documents guarantee issuance

Based on the national credit programs with objectives assigned, and within the time frame for developing annual policy credit plans, policy banks shall develop the next year's target credit capital plan, including the capital from issuing government-guaranteed bonds in the domestic market, and submit it to the Ministry of Finance for examination and reporting to the Prime Minister for approval of the government guarantee limit. The application documents for guarantee issuance include:

1. The issuance proposal of guaranteed bonds by the issuer entity according to the model attached as Appendix 1 to this Circular.

2. Bond issuance plan. In addition to the basic contents prescribed in Clause 2, Article 17 of Decree No. 01/2011/NĐ-CP, the issuance plan must include the following contents:

a) The situation of raising and using capital to implement national credit programs with objectives in the three (03) consecutive years prior to the issuance year, specifying: total raised capital divided by each type of capital, recovered capital (principal, interest); total loan amount and outstanding loans in the year by each program, overdue debt ratio (if any);

b) The situation of paying off principal and interest and outstanding bond guarantees in the three (03) consecutive years prior to the planning year;

c) Projected plan for the next year's target credit program, including: program name according to Government and Prime Minister decisions; planned growth in targeted credit; total capital, including capital from issuing guaranteed bonds; projected loan amount and outstanding loans;

d) Plan for raising capital, repaying principal and interest on guaranteed bonds in the planning year.

3. Financial reports of the three (03) consecutive years prior to the issuance request, audited by the State Audit Agency and reports on the implementation of State Audit Agency recommendations (if any) or independent auditing organizations legally operating in Vietnam.

4. Documents proving eligibility for issuance

a) Documents of the Government and Prime Minister approving national target credit programs;

b) Credit growth plans for national target credit programs;

c) Documents of the Management Board or Board of Directors approving the financial-credit plan for the planning year, including capital from issuing guaranteed bonds.

Article 10. Approval Procedures and Formalities for Guarantee Issuance

1. Policy banks submit one (01) set of documents prescribed in Article 9 of this Circular to the Ministry of Finance for checking completeness and validity and requesting supplementary documents (if necessary). If the documents are complete, the Ministry of Finance will notify policy banks to submit two (02) additional sets of documents for review and provide opinions.

2. Within thirty (30) working days from the date of receiving all issuance bond documents as prescribed in Clause 1 of this Article, the Ministry of Finance shall review and provide opinions on the annual issuance plan for guaranteed bonds of policy banks to report to the Prime Minister for approval. The review includes:

a) Conditions for issuing guaranteed bonds;

b) Annual government guarantee limit approved by the Prime Minister;

c) Capital for implementing target credit programs and the issuance plan for guaranteed bonds;

d) Plans for using and managing the issued bond funds, and plans for arranging funds to pay off principal and interest on bonds when due;

đ) Financial situation of the issuer.

3. After receiving the Prime Minister's approval document on the policy and limit of guarantee issuance, the Ministry of Finance shall notify the issuer in writing of the maximum limit allowed for issuing guaranteed bonds to implement according to this Circular.

Chapter III

ORGANIZATION OF ISSUING GUARANTEED BONDS IN THE DOMESTIC MARKET

Article 11. Registration of Guaranteed Bond Issuance Plan

1. For Enterprises

a) Based on the notification of the Ministry of Finance at Clause 4, Article 8 of this Circular, the enterprise registers the issuance plan for guaranteed bonds with the Ministry of Finance for the Ministry of Finance to examine and approve before organizing the issuance.

- In the case where the bond issuance project stipulates only one single issuance, the enterprise must complete the registration procedures for issuance with the Ministry of Finance no later than thirty (30) working days prior to the planned issuance date of the bonds so that the Ministry of Finance can announce the issuance interest rate range for guaranteed bonds;

- In the case where the bond issuance project stipulates multiple issuances within a year or across different years, by November 30 each year, the enterprise must register its issuance plan for the following year, detailing the issuance volume and term of each issuance quarter.

b) Based on the issuance plan for guaranteed bonds approved in writing by the Ministry of Finance, the enterprise organizes the issuance in accordance with the provisions of this Circular.

2. For policy banks

a) Based on the notification of the Ministry of Finance at Clause 3, Article 10 of this Circular, based on the disbursement plans of target credit programs and the repayment plans for maturing guaranteed bonds, policy banks register their annual issuance plans divided by quarters with the Ministry of Finance according to the form prescribed in Appendix 2 of this Circular for examination and comments before implementation.

b) Based on the detailed annual issuance plan by quarter approved in writing by the Ministry of Finance, policy banks organize the issuance of bonds in accordance with the provisions of this Circular and must ensure the principle that:

- The actual issuance volume in the quarter does not exceed the issuance limit already commented on by the Ministry of Finance;

- In the case where the actual issuance volume in the quarter is lower than the registered issuance limit with the Ministry of Finance, the remaining amount can be carried over to the next consecutive quarter;

- In the case where there is a need to issue beyond the quarterly plan already approved by the Ministry of Finance, policy banks report to the Ministry of Finance for examination and comments before organizing the issuance. The request letter sent to the Ministry of Finance must clearly state the reasons for requesting adjustments to the issuance plan.

Article 12. Methods of Issuing Bonds

1. For Enterprises

a) The method of issuing guaranteed bonds for enterprises is implemented according to the approved bond issuance project by the competent authority, including the following methods:

- Auction issuance;

- Guarantee issuance;

- Agency;

- Retail sale.

b) Enterprises organize the issuance of bonds in accordance with the laws on corporate bond issuance. In the case of public issuance of bonds, enterprises must comply with the laws on securities.

2. For policy banks

a) The methods of issuance include:

- Auction issuance of bonds through the Hanoi Stock Exchange;

- Agency issuance.

b) Policy banks may apply the procedures and formalities for issuing government bonds through auction and agency methods to issue guaranteed bonds.

Article 13. Registration, custody, and listing of bonds

1. For Enterprises

a) Guaranteed bonds are registered, deposited, and listed in accordance with the laws on registration, deposit, and listing of corporate bonds and the Securities Law;

b) The registration, deposit, and listing process for guaranteed bonds is applied similarly to the process for corporate bonds.

2. For policy banks

a) Guaranteed bonds are centrally registered and deposited at the Vietnam Securities Depository and listed for centralized trading at the Hanoi Stock Exchange;

b) The registration, deposit, and listing process for guaranteed bonds is applied similarly to the process for government bonds.

Chapter IV

PRINCIPLES FOR PRINCIPAL AND INTEREST PAYMENTS ON BONDS, ACCOUNTING REGIME, ISSUE FEES, PAYMENT FEES, AND GUARANTEE FEES

Article 14. Principal and Interest Payment of Bonds

1. The issuer subject shall be responsible for paying the principal and interest of bonds upon maturity using its own legitimate sources of capital.

2. In cases where the issuer subject is unable to fulfill or fully fulfill the obligation to repay the principal and interest of bonds upon maturity, the Ministry of Finance shall perform the issuer subject's payment obligation within the scope of the government guarantee level already granted according to this Circular and current laws on the issuance and management of government guarantees.

Article 15. Accounting System

The issuer subject and related entities shall be responsible for organizing accounting work in accordance with the Accounting Law and other relevant legal documents governing the current accounting system.

Article 16. Issuance Fees and Principal and Interest Payment Fees of Bonds 1. Issuance fees of bonds

Bidding fees, guarantee fees, and agency issuance fees for bonds shall be agreed upon between the issuer subject and the bidding organization, guarantor, and agency issuing bonds.

a) For Enterprises

Bidding fees and agency issuance fees for bonds shall be applied at the current issuance fee rate for government bonds.

b) For Policy Banks

For guaranteed bonds registered and deposited at the Securities Depository Center, the principal and interest payment fees for bonds shall be equivalent to the principal and interest payment fees for government bonds.

2. Payment Fees for Principal and Interest on Bonds

Article 17. Government Guarantee Issuance Fee

The issuer subject of guaranteed bonds must pay the government guarantee issuance fee according to the current regulations on the issuance and management of government guarantees.

Article 18. Accounting for Bond Issuance Fees

1. Enterprises may account for the bond issuance costs specified in Articles 16 and 17 of this Circular into the value of the project utilizing the issued bond funds or enterprise operating expenses as stipulated by law.

2. Policy banks may account for the bond issuance costs specified in Articles 16 and 17 of this Circular into their operating expenses.

Article 19. Prompt Reporting of Each Issuance Result

Chapter V

INFORMATION AND REPORTING REGIME

and Repurchase, Exchange 1. Within five (05) working days from the end of each issuance period, the issuer subject must report in detail to the Ministry of Finance the issuance results so that the Ministry of Finance can determine the actual guarantee obligations according to the law. The content of the report follows the form attached in Appendix 3 of this Circular.

2. Based on the issuer subject's report, within ten (10) working days, the Ministry of Finance will issue a notification confirming the guarantee obligation for the issued bond series. For policy banks, the confirmation of the guarantee obligation is carried out quarterly.

3. Within ten (10) working days from the end of the repurchase or exchange period of bonds according to the approved project as stipulated in Article 6 of this Circular, the issuer subject has the responsibility to report to the Ministry of Finance the results of the repurchase and exchange of bonds so that the Ministry of Finance can determine and adjust the actual guarantee obligation.

Article 20. Quarterly and Annual Reports

1. Within ten (10) working days after the end of each quarter and twenty (20) working days after the end of the fiscal year, the issuer subject is responsible for submitting reports on the situation of raising and using funds, and the situation of repaying the principal and interest of guaranteed bonds in writing to the Ministry of Finance for monitoring according to the form attached in Appendix 4 of this Circular.

a) Annual financial statements audited within ten (10) working days from the date of audit results.

2. In addition to the contents of the periodic reports stipulated in Clause 1 of this Article, the issuer has the responsibility to submit reports to the Ministry of Finance:

a) The audited annual financial report shall be submitted within ten (10) working days following the completion of the audit.

b) Financial situations for certain cases necessary for evaluating the financial capacity of the issuer as required by the Ministry of Finance.

Chapter VI

VIOLATIONS AND SITUATIONS WHERE THE ISSUER IS UNABLE TO PAY DEBTS

Article 21. Suspension of Bond Issuance with Guarantee

1. The Ministry of Finance shall implement the suspension of guaranteed bond issuance in the following cases:

a) The issuer does not carry out issuance in accordance with the approved bond issuance plan and the issuance announcement by the Ministry of Finance;

b) The interest rate of issued bonds exceeds the interest rate range announced by the Ministry of Finance;

c) The issuance volume exceeds the limit approved by the Ministry of Finance.

2. The suspension of issuance shall be applied to the issuance period with violations mentioned in Clause 1 of this Article (if issuance has not been organized) and subsequent issuance periods (if any) within the issuance limit of the issuer that has been approved.

3. Upon receiving the notification from the Ministry of Finance, the issuer must immediately implement the suspension of bond issuance.

Article 22. Handling Cases Where the Issuer Cannot Repay Debt

1. At least forty-five (45) working days before the due date for principal and interest repayment of the bonds, if the issuer is unable to repay, the issuer must submit a written request to the Ministry of Finance for debt repayment on its behalf. The written document submitted by the issuer to the Ministry of Finance must clearly explain the reasons for being unable to repay the debt and include supporting documents such as:

a) Financial statements with detailed explanations;

b) Statements of deposit accounts and cash balances of the issuer, amounts owed for payment, and receivables;

c) A confirmation document from the owner regarding the issuer's inability to repay the debt, which is a guaranteed bond-issuing enterprise.

d) Other documents as required by the Ministry of Finance.

2. Within ten (10) working days from the date of receipt of the request and confirmation of non-payment by the owner (in cases where the issuer is a business entity), the Ministry of Finance will examine and handle the case of the issuer's inability to repay debt according to Article 18 of Decree No. 15/2011/NĐ-CP of the Government.

3. The issuer is responsible for recognizing the debt and repaying it to the Ministry of Finance according to the provisions of Clause 6 and Clause 7 of Article 15 of Decree No. 15/2011/NĐ-CP of the Government.

Chapter VII

RESPONSIBILITIES OF RELATED AUTHORITIES

Article 23. Responsibilities of the Ministry of Finance

1. Chair the review of the bond issuance plan with guarantee of the guaranteed entities to submit to the Prime Minister for approval of guarantee issuance according to this Circular.

2. Monitor and compile reports on the situation of bond issuance with guarantee by issuers and suspend issuance in cases of violation according to this Circular.

3. Specify the interest rate range for domestic issuance of guaranteed bonds.

4. Handle issues within the authority of the Ministry of Finance when the issuer of guaranteed bonds cannot repay principal and interest at maturity according to this Circular and relevant laws on government guarantee issuance and management.

Article 24. Responsibilities of the State Bank

1. Confirm the issuance of guaranteed bonds into the international market within the annual foreign commercial loan limit of the Government upon the issuer's request.

2. Coordinate with the Ministry of Finance to provide opinions on the issuance plan of guaranteed bonds for credit institutions according to this Circular.

3. Guide operational procedures for guaranteed bonds to be traded in the open market and pledged for refinancing loans according to the law.

Article 25. Responsibilities of the Bond Issuer

1. Develop the bond issuance plan with guarantee to submit to the competent authority for examination and approval, and bear responsibility for the accuracy and truthfulness of information in the issuance plan and disclosure to investors.

2. Organize bond issuance in accordance with the approved plan by the Prime Minister and the announcement by the Ministry of Finance as stipulated in this Circular, and bear responsibility for bond issuance linked to the disbursement progress of programs and projects.

3. Bear full responsibility for the entire process of using funds raised through guaranteed bond issuance for the intended purpose and effectively according to the approved plan by the Prime Minister.

4. Bear responsibility for fully repaying all principal and interest of the bonds at maturity according to the approved plan by the Prime Minister.

5. Fully comply with information and reporting requirements as stipulated in this Circular.

6. Fulfill other obligations of the guaranteed party as prescribed in Decree No. 01/2011/NĐ-CP, Decree No. 15/2011/NĐ-CP of the Government, this Circular, and current regulations on external borrowing and debt management.

Article 26. Responsibilities of the State-owned Enterprise Owner

1. Approve the issuance plan for guaranteed bonds as stipulated in this Circular and the laws on corporate bond issuance.

2. Supervise the process of raising and using funds from corporate bonds issued with government guarantees in accordance with this Circular and the laws on issuing corporate bonds.

Chapter VIII

IMPLEMENTATION

Article 27. Implementation Provisions

1. This Circular takes effect from April 18, 2012.

2. This Circular replaces the following guidance contents:

a) The guidance contents on issuing government-guaranteed corporate bonds stipulated in Circular No. 21/2004/TT-BTC dated March 24, 2004 of the Ministry of Finance guiding the auction of government bonds, government-guaranteed corporate bonds, and local government bonds through centralized securities trading markets;

b) The guidance contents on issuing government-guaranteed corporate bonds stipulated in Circular No. 29/2004/TT-BTC dated April 6, 2004 of the Ministry of Finance guiding the issuance guarantee and agency issuance of government bonds, government-guaranteed corporate bonds, and local government bonds;

c) The guidance contents on issuing government-guaranteed corporate bonds stipulated in Decision No. 66/2004/QĐ-BTC dated August 11, 2004 of the Minister of Finance promulgating the regulations guiding the procedures and formalities for issuing government bonds, government-guaranteed corporate bonds, and local government bonds.

3. In the course of implementation, if there are difficulties or obstacles, issuers and related units shall promptly report to the Ministry of Finance for specific guidance./.