Finance Ministry to issue bond-for-debt swap

May 01, 2015 | 16:10

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The Ministry of Finance (MoF) has asked the Government of Viet Nam to issue new Government bonds in the international capital markets for debt rescheduling.

MoF asks the Government of Viet Nam to issue new Government bonds in the international capital markets for debt rescheduling.-Photo Vietstock.vn

MoF Deputy Do Hoang Anh Tuan said at the Government's regular meeting on April 25 that a draft resolution for the issuance during the period 2016 to 2020 period had been submitted to Prime Minister Nguyen Tan Dung for his approval.

Tuan said the bond-for-debt swap would raise funds for developing the country's economy, implement key projects and restructure foreign debt.

He added that the issuance would not exceed 65 per cent of the GDP or the debt ceiling during the next five years.

The Minister-Chairman of the Government Office, Nguyen Van Nen, said the bond-for-debt swap was a normal operation, adding it would restructure debts in a sustainable and more efficient way.

Late in 2014, the Minister of Finance Dinh Tien Dung had told local media that Viet Nam would issue more ten-year G-bonds, worth $1 billion, in the international market.

Fitch and Standard & Poor's currently rate Viet Nam at B+ and BB- levels respectively, along with a stable economic outlook. Moody's had upgraded its rating on Viet Nam's senior unsecured bonds to B1 from B2, citing macroeconomic stability and a strengthening in the balance of payments and external payments position of the country.

Thus, owing to better economic prospects, VN can swap its debts with lower interest.

MoF said the issuance of $1 billion last November, the third time for this type, had helped save $32.5 million in interest for a decade with the fixed interest rate at 4.8 per cent.

The ministry said interest in similar bonds in 2005 and 2010 was pegged at 6.875 per cent and 6.755 per cent respectively.

VNS

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