PetroVietnam bonds snapped up by investors

“Customers are not waiting for the official launch day. Many regret that they did not get a chance to purchase any of our bonds,” a PetroVietnam spokesperson said last week.
PetroVietnam’s bonds have a coupon of 8.7 per cent in the first year and in the following four years the rates will be 0.5 per cent higher than the saving rates. Returns will be paid in Vietnam dong once a year on August 25. But according to some securities experts, interest rates of 8.7 per cent for the first year are unattractive compared to other bonds with the same term. Ho Chi Minh City is to issue 9 per cent fixed rate five-year bonds next month.
Petroleum Finance Company director Nguyen Tien Dung, an affiliate of PetroVietnam, said: “Following our analysis, present interest rates have peaked and will go down in the future. That means the 8.7 per cent rate is reasonable.”
PetroVietnam said the bond sale was intended as a trial for future issues.
“Taking into account the success of the first issuance and our need for more capital, PetroVietnam will launch more bonds on a larger scale in the near future. The chances then will be equal for both Vietnamese and foreigners to purchase the bonds in Vietnam,” Dung said.
“For the next issuance, we will surely consider also issuing bonds on the stock market. More and more capital can be mobilised if we know how to utilise different channels.”
Dung said PetroVietnam had thought about issuing bonds in US dollars on the local market, but the decision would take more time.
“We need to fulfil complicated and troublesome procedures. After being approved, we can only issue bonds to domestic customers and get back cash. The current forex regulation stipulates that cash in foreign currency must have an accepted origin in order to be accepted, which is a difficult task for us.”
PetroVietnam had earlier planned to issue bonds on the US stock exchange but failed due to many reasons. The corporation is now in urgent need of capital sources for its large-scale projects. Petro Vietnam has more than 30 subsidiaries and associated companies.