Foreign banks support sovereign bond issue

This is the country’s third global bond offer after raising $1.7 billion in 2005 and again in 2010. On November 7 the government issued $1 billion in 10-year bonds at an annual interest rate of 4.8 per cent. It should be noted that this rate is below that of the previous two issuances.

“This has demonstrated the government’s efforts to proactively manage its outstanding debt profile and to channel more resources into product endeavours,” said Truong Hong Long, director general of Debt Management and External Finance, a department under the Ministry of Finance.

According to International Financing Review, 55 per cent of investors in the bonds were from the US, while Europe accounted for 28 per cent and Asia for 17 per cent.

By investor type, 84 per cent of the bonds were allocated to funds, 12 per cent to banks, and the remainder to pension funds and insurers. Proceeds of the issuance will be used for the government’s general funding purposes, including managing its outstanding obligations.

Deutsche Bank, HSBC and Standard Chartered managed the bond transactions. HSBC was the billing and delivery bank on the tender offer and the new issue while Standard Chartered served as lead arranger.

NiruktSapru, CEO of Standard Chartered Vietnam said, “We are very pleased to be the government’s sole sovereign credit ratings advisor and in this capacity we remain committed to enhancing the government’s engagement with the rating agencies and global investors alike.”

The issuance comes at a time where Vietnam’s macro-economy is stable and there have been strong improvements to the market and financial sector. Recently, Fitch Ratings upgraded its rating of Vietnam’s credit to BB- from B+ and Moody raised its unsecured bonds ratings from B2 to B1.