Vietnam to Tap Global Market with First Bond Issue

Vietnam, which has considered the idea of tapping global capital markets since the 1990s, has approved the country's first sovereign bond issue, local media reported Thursday.

The Finance Ministry will issue the dollar-denominated bonds sometime this month, but local newspapers did not say how much the issue was intended to raise.

Ministry sources told Reuters in August the plan was to raise $500 million and the debt issue would help create a benchmark for Vietnamese bonds abroad.

The announcement was a major step forward for the country's fledgling financial markets, fund managers said.

"The fact we got the green light today is tremendous news and I'm sure it will be well received by emerging market and global bond investors," said John Shrimpton, director of Dragon Capital in Ho Chi Minh City.

The cabinet decision published in state-run newspapers said the government "assigns the Finance Minister to coordinate with related ministries and agencies to complete the issue of the government bond within October 2005".

A Finance Ministry official confirmed the approval but declined further comment.

"The ministry will announce details of the sale soon," he said.

The Finance Ministry has said the issue would not only raise funds but also help create a benchmark for Vietnamese bonds abroad.

Long wait

Vietnam mulled the issue several years ago but the plan, closely watched by foreign investors, faced doubts while the country's sovereign ratings remained below investment grade.

However, hopes for the issue were revived in July when global rating agency Moody's increased Vietnam's foreign currency ceiling for bonds and notes.

The agency raised its foreign currency rating for government debt to Ba3, three notches below investment grade, from B1.

The only dollar exposure international bond investors can get to Vietnam was through $543 million worth of relatively illiquid Brady bonds issued in 1998, which were a restructuring of old debt. In September 2002 Hanoi said it had bought back one-third of the bonds.

Analysts had said the upgrade by Moody's could persuade Hanoi to make a fresh offering.

The proceeds from the October bond issue will be invested in a large shipyard belonging to state-run shipbuilder Vinashin which is receiving more orders from foreign shipping firms.

(Source: Reuters)
Story from Thanh Nien News
Published: 06 October, 2005, 21:41:23 (GMT+7)
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