New prospects for Vietnam’s int’l bonds

The national industrial giant on May 11 launched $90 million worth of international bonds which are due to be listed on the Singapore Stock Exchange, offering an annual interest rate of 9.875 per cent for a five-year term of reimbursement.

It is part of HAG’s plan to raise $200 million from international bonds, making it the first private domestic business to launch its bonds to international markets.

HAG plans to invest the international bond proceeds in hydropower and rubber projects as well as to strengthen its floating capital.

Vietnam Coal and Mineral Group (Vinacomin) is expected to follow suit with its proposal to issue international bonds worth $500 million now on the table for government's consideration and approval. The group has already chosen consultants for the move, including leading international banks such as ANZ of Australia, Citibank of USA and Credit Agricole of France. If everything goes smoothly, its scheme will become active by the middle of this year.

Vietnam Oil and Gas Group and Vietnam Electricity Group are prepared for similar action, with values up to billions of dollars.

The financial sector does not want to lag behind with the Bank for Industry and Development of Vietnam (BIDV) and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) making it.

Economists however warned of risks ahead as such schemes are largely dependent on the enterprises’ “internal health”, especially their credit ratings indexes, which have been recently reduced among foreign investors as a consequence of the Vinashin scandal.

HAG decided to issue international bonds only after Standard & Poor’s rated its bonds at the B level with positive prospects. On the contrary, Vinacomin had to delay its plan to issue international bonds in 2010 after Standard & Poor’s reduced its rating from BB to BB-.

Despite awareness of numerous risks ahead, many international financial institutions expressed optimism on Vietnam’s international bonds. HSBC, for example, said Vietnam ’s international bonds are expected to bring in more profits this year than those from other Asian countries, due to its government’s sound policy on inflation control.