Decree No. 98-896 of October 21, 1998 Amending and Supplementing Certain Provisions of Decree No. 97-656 of May 7, 1997 on Treasury Bond Subscription by Auction

DECREE NO. 98-896 OF OCTOBER 21, 1998 amending and supplementing certain provisions of decree no. 97-656 of may 7, 1997, fixing the conditions for subscription to treasury bonds by auction. The Prime Minister, Head of Government, Having regard to the Constitution, Having regard to Law No. 63-015 of July 15, 1963 establishing general provisions on public finances and its amending texts, Having regard to Law No. 95-030 of February 22, 1996 relating to the activity and supervision of credit institutions, Having regard to Decree No. 68-080 of February 13, 1968 establishing general regulation on public accounting and its amending text, Having regard to Decree No. 97-656 of May 7, 1997 fixing the conditions for subscription to treasury bonds by auction, In Council of Ministers, Decrees:

Article 1. The provisions of Articles 2, 4, 5 and 6 of Decree No. 97-656 of May 7, 1997 fixing the conditions for subscription to treasury bonds by auction are amended and supplemented as follows:

"Art. 2 (new). The market for new issuances, known as the primary market, is reserved for approved market intermediaries and all potential subscribers. Market intermediaries are institutions selected to ensure the placement and trading of treasury bonds with the public. An agreement will be established to define the reciprocal obligations between the intermediary and the Treasury. The status of intermediary is granted by the Ministry of Finance and Economy, which publishes the list of intermediaries by order. The conditions for access to the primary market are also fixed by order of the ministry in charge of Finance and Economy."

"Art. 4 (new). A centralizing body is responsible for:

• the management of securities on the primary market;
• the settlement of operations in accordance with the delivery versus payment principle;
• the centralization of all operations;
• the publication of market prices;
• the publication of the results of each issuance.

This role is performed by the Central Bank. A service commission, paid by the Treasury, will be collected by the centralizing body at the end of each quarter. The terms for allocating this commission are fixed by an agreement established between the Treasury and the Central Bank."

"Art. 5 (new). The bonds carry a pre-deducted interest represented by the difference between the offered purchase price and the corresponding nominal value. Offers are filled in ascending order of the proposed rates. The subscriber who has offered the lowest rate will be served first at the offered price, up to the amount requested by the public Treasury. The selection of offers proceeds in two phases:

• the first, in the form of an auction, covers competitive offers which are filled in ascending order of proposed rates up to the announced amount. However, the centralizing body reserves the right to reject any offer with a rate higher than a limit rate it determines. During this first phase, the Treasury may accept additional offers if the rates are favorable, serving first the subscribers who offered the lowest rates. The allocation of the marginal tranche will be made pro rata to the offers.
• the second covers non-competitive offers, which are allocated, according to Treasury needs, at the weighted average rate of the first phase."

"Art. 6 (new). The Treasury makes public to the market the quarterly schedule of competitive offers with their maturities and corresponding amounts, as well as non-competitive offers with an announced total amount. However, these publications are made on an indicative basis and may be modified according to market developments."

Art. 2. The Prime Minister, Minister of Finance and Economy is responsible for the execution of this decree, which will be published in the Official Journal of the Republic. Done at Antananarivo, on October 21, 1998. Tantely ANDRIANARIVO

By the Prime Minister, Head of Government: The Prime Minister, Minister of Finance and Economy, Tantely ANDRIANARIVO

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