The Vietnam Bank for Industry and Trade (VietinBank) has become the first local financial institution to successfully issue US$250 million worth of bonds in international markets at an annual real coupon of 8.25%.
“On the issuance date, May 10, we sold out the bonds to investors from Asian, European and American markets. The coupon is set at 8% per annum with the maturity due in 2017 and the real coupon fixed at 8.25% yearly,” said VietinBank deputy general director Le Duc Tho.
“An international bond sale is a suitable solution for VietinBank to mobilize capital thanks to moderate borrowing costs. Especially, it is also a way for us to explore the interest of foreign investors towards the local market,” Tho told the Daily on the phone.
Tho said he believed the first bond issuance would pave the way for his bank and other local enterprises to enter bond markets outside the country. In the context of international investors’ concerns over uncertainties on global capital markets, Tho said good performance of his bank’s bond issuance was a positive signal.
VietinBank targets to mobilize up to US$2 billion from foreign markets in the years to come. In a statement released last Saturday, HSBC Bank (Vietnam) announced its role as the only management and credit ratings consulting agency for the deal.
VietinBank will pay the coupon of the U.S. dollar-denominated bonds twice a year upon the payment date. The lender will use surplus amounts from the deal to lend customers for its general proposes subject to prevailing laws, the central bank’s regulations as well as other agreements it is involved in to get the bond issuance permission, said HSBC Bank (Vietnam)’s statement.
HSBC Vietnam pointed out the deal has contributed to improving the image of the local growing capital market.
In the backdrop of international bond markets facing difficulties, the success of VietinBank’s bond issuance has proved foreign investors are confident of the lender and this will offer more chances for other local companies, according to Sumit Dutta, chief executive officer of HSBC Bank (Vietnam).
Like VietinBank, a number of State-owned conglomerates and corporations over the past two years have also outlined plans to issue international bonds to cope with tough capital attraction at home. However, the collapse of the loss-making Vietnam Shipbuilding Industry Group (Vinashin) shows weak financial conditions of these enterprises, meaning they are still not ready to realize the schemes.
The Saigon Times Daily