Sunday, August 19, 2007

Vietnam to raise US $1 billion on international bond market

Dung Quat oil refinery.

.The government is set to make a US $1 billion sovereign bond issue in September to raise funds for some key refinery, power, and cargo ship projects, the Vietnamese Finance Ministry said.

The issue will be for maturities of 15 and 20 years with the proceeds handed over to some public sector companies.

The money will help PetroVietnam build the US $2.5 billion Dung Quat oil refinery, the country's first, will allow shipping firm Vinalines buy cargo vessels, and mean Song Da Corp can build the Sekaman 3 and Hua Na hydroelectric power plants.

The size of the issue was increased from the initially planned $500 million.

In October 2005, when Vietnam came out with its first dollar bond issue, the size was upped from US $500 million to US $750 million after building an order book of US $4.5 billion.

The January 2016 bond was sold to yield 7.125%. Credit Suisse First Boston was the sole bookrunner.

The 10-year issue was oversubscribed six times.

The country’s successful issue of its first dollar-denominated sovereign bonds and its upgraded currency ratings are interesting international investors in another issue.

The heavy trading was fuelled by Standard & Poor's upgrading of Vietnam’s foreign and domestic currency ratings last month by one notch to BB and its domestic currency rating to BB+ from BB.

The outlooks on the long-term ratings were stable, while both short-term foreign and local currency ratings were rated 'B'.

In March this year ratings firm Moody's upgraded its outlook for Vietnam's foreign-currency bonds to positive from stable, while Fitch Ratings assigned BB to Vietnam's long-term foreign currency Issuer Default with a stable outlook.

Locally, Vietnam's State Treasury is set to auction VND 700 billion (US $43.3 million) worth of September 2012 government bonds early next month, the Hanoi Securities Trading Center has said.

The State Treasury will auction the five-year bonds on September 5 and issue the debt on September 7 for maturity on September 7, 2012.

Vietnam's Finance Ministry has projected it would raise VND 22 trillion (US $1.4 billion) by the end of the year through government bonds, to invest in transport and irrigation projects.

Financial officials said the government would step up the issue of bonds in the remaining months of the year to soak up liquidity in the economy as a measure to curb rising inflation.