Cranes operate at a residential construction site, center right, in Hanoi. Vietnam is looking to sell dollar bonds globally for the first time in almost five years. Photo credit: Bloomberg
Vietnam is looking to sell dollar bonds globally for the first time in almost five years, seeking to refinance existing debt after upgrades from Fitch Ratings and Moody’s Investors Service.
Vietnam indicated previously it may raise about $1 billion and investment banks handling the sale are marketing the 10-year debt with an indicative yield of about 5.125 percent, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. Existing notes due in 2016 and 2020, which can be switched into the new issue or tendered for cash, rallied Thursday.
Vietnam is looking to reduce the cost of its dollar borrowings to take advantage of its improving credit profile and as an end to monetary easing by the Federal Reserve fuels speculation that US interest rates are headed higher.
Fitch this week raised its Vietnam credit rating by one step to BB-, three levels below investment grade, and said government policies have put the Southeast Asian nation’s economy on a more stable footing. Moody’s upgraded in July.
“Investors favor dollar-denominated issues,” Rajeev De Mello, who manages $10 billion as head of Asian fixed-income at Schroder Investment Management Ltd. in Singapore, said by phone. “The search for yield is still there. We haven’t seen Vietnam for a while in the market. The macro situation in Vietnam has stabilized. All those factors will be good for this issue.”
Improving economy
The Moody’s upgrade was the company’s first for Vietnam since 2005. State-owned Vietnam Shipbuilding Industry Group defaulted on an internationally syndicated $600 million loan in 2010, prompting concern over the stability of the country’s banking system.
The government is targeting 2014 economic growth of 5.8 percent that would be the fastest in three years.
The yield guidance given for today’s sale is below the coupons paid in Vietnam’s last two dollar issuances and 278 basis points higher than the 2.34 percent offered by similar- maturity US Treasuries.
The US yield is forecast to climb to 3.37 percent by the end of 2015, based on the median of 74 estimates in a Bloomberg survey.
Vietnam’s tender cash offer for existing securities is $1,070 for every $1,000 of 2016 bonds held, and $1,140 per $1,000 of 2020 notes, the person familiar said, adding that preference will be given to those switching into the new issue. Lead arrangers for the refinancing are HSBC Holdings Plc, Deutsche Bank AG and Standard Chartered Plc.
Bonds rally
Both of the existing securities advanced 0.3 percent Thursday as of 1:44 p.m. in Hong Kong, according to data compiled by Bloomberg.
The yield on the $750 million of debt maturing in January 2016 has dropped 143 basis points this year to 1.94 percent, including a 31 basis point decline today. T
hat for the $1 billion of bonds due January 2020 fell 126 basis points, or 1.26 percentage points, to 3.97 percent. Both of the notes had 10-year tenors at issue and their coupon rates were 6.875 percent and 6.75 percent, respectively.
The securities due November 2024 will be priced at about 5 am Friday in Hong Kong, when the tender offer expires, according to the person familiar. Policy makers discussed the possibility of selling about $1 billion of dollar bonds, Nguyen Van Nen, chairman of the government office, told reporters in Hanoi on Aug. 28.
Đăng ký: VietNam News