Vietcombank, Vietnam’s fourth-largest lender by assets, plans to raise $1 billion selling bonds in international markets, its chairman said.
The debt, with terms of up to 10 years, could be issued in 2012 pending shareholder approval, Nguyen Hoa Binh said in a report seen by Reuters on Thursday. The report was scheduled to be delivered to shareholders at a meeting on April 2.
Hanoi-based Vietcombank, 15 per cent owned by Japan’s Mizuho Corporate Bank, a unit of Mizuho Financial Group, also needs permission from the central bank to sell the debt.
Binh said proceeds will be used to supplement medium- and long-term foreign currency funds of Vietcombank, also known as the Bank for Foreign Trade of Vietnam.
Foreign currency funds account for 30 per cent of the total deposits at Vietcombank and foreign currency loans account for about a third of its outstanding loans.
In January Standard & Poor’s revised its outlook on the long-term rating for Vietcombank to stable from negative and affirmed the “B+/B” counterparty credit ratings. It said Vietcombank’s capital and earnings would be weak.
Vietcombank shares closed down 1 per cent at 28,700 dong.
Vietnam is seeking to improve its image in the international financial markets as its companies and banks turn more and more to overseas investors for funds at a time when foreign investment in the southeast Asian nation is declining.
Vietcombank may have to raise funds at higher costs after a scandal at state shipbuilder Vinashin, said Quach Manh Hao, deputy director of Thang Long Securities.
He was referring to Vietnam Shipbuilding Industry Group, which nearly went bankrupt in 2010 under almost $4.5 billion of debt after it became overextended and was hit by a slump in ship orders amid the global financial crisis.
“The (Vietcombank) plan is highly feasible, and higher costs may be offset by the country’s positive economic outlook because the interest among foreign investors in Vietnam’s banking sector is rising,” Hao said.
Standard Chartered Bank said it will advise the Vietnam government on improving its sovereign credit rating as Vietnam seeks to attract more foreign investment.
Vietcombank’s plan to raise overseas bonds follow those by other Vietnamese companies and VietinBank. Vincom Joint Stock Co, Vietnam’s leading real estate developer, said it had raised $185 million via five-year dollar bonds, at an annual coupon of 5 per cent, and plans to list them on the Singapore stock exchange.
VietinBank, Vietnam’s largest partly private lender by assets, has begun roadshows to sell bonds in Asia, Europe and the United States, which could involve an issue of $500 million. ($1=20,800 dong)