Experts see low risks in seeking foreign capital

Vietnamese commercial banks have been seeking capital from overseas for the last two years.

VP Bank has consulted with shareholders about a plan to issue and list international bonds. There are two options for the bank. It would issue $1 billion worth of 3-5 year bonds this year and in 2020, or it would issue $120 million worth of 3-year green corporate bonds which will be disbursed to fund green projects.

Experts see low risks in seeking foreign capital


Tien Phong Bank in early June announced the plan to issue $200 million worth of international bonds between June 28 and July 12.

Prior to that, in late September 2018, HD Bank asked for shareholders’ opinions on the plan to issue $300 million convertible 5-year-and-one-day bonds with fixed interest rates to fewer than 100 investors.

The dong/dollar exchange rate has stabilized over the last few years with the dong devaluation level not exceedinh more than 2 percent each year.


Analysts commented that banks now tend to seek capital offshore because the foreign currency interest rate and dong/dollar exchange rate risks have decreased significantly.

Meanwhile, the banks’ demand for medium- and long-term capital continues to be high, while the domestic capital sources are limited.

Not only issuing corporate bonds in foreign currencies, banks have also been seeking capital through commercial loans. LienViet Post Bank in late August 2018 signed a 3-year credit contract valued at $50 million with JP Morgan Chase Bank, N.A Singaporean branch. In September of the same year, SHB borrowed $20 million from IIB and 20 million euros from IBEC, both from Russia.

IFC us one of the best known financiers providing commercial loans to Vietnamese banks. In 2018, IFC provided a loan worth $100 million to OCB, and lent $100 million to TP Bank after pouring VND405 billion into TP Bank in an exchange for 5 percent of shares of the bank in 2016.

 

In 2017, AB Bank received a syndicated loan worth $150 million from IFC, and VIB received $185 million from IFC and three foreign banks.

Analysts said the long-term bond issuance will serve the banks’ plan to increase regulatory capital and improve CAR. Under the current regulations, long-term (more than 5 years) valuable papers can be counted as 2-tier capital of credit institutions.

Therefore, banks have rushed to issue bonds in dong and foreign currencies. ACB has issued VND2.5 trillion worth of 3-year bonds, while VietinBank wants to issue VND10 trillion worth of bonds this year.

In general, when issuing corporate bonds in Vietnam dong, issuers need to offer interest rates high enough to cover inflation rate and make bonds more attractive than bank 12-month term deposits. When issuing bonds in foreign currencies, issuers can save financial costs.

The dong/dollar exchange rate has stabilized over the last few years with the dong devaluation level not exceedinh more than 2 percent each year.

Linh Lan

Vietnam’s local currency bond market returns to upward trend in Q1

Vietnam’s local currency bond market returns to upward trend in Q1

Vietnam’s local currency (LCY) bond market reached a size of VND1,193 trillion (US$51 billion) at the end of March, up a marginal 0.7% quarter-on-quarter, a reversal from the 5% quarter-on-quarter contraction in the last quarter of 2018.  

Developing bond market can help satisfy demand for capital

Developing bond market can help satisfy demand for capital

Vietnamese enterprises are in dire need of capital to expand production and business, but the current development of the capital market cannot meet this demand. 

 
 

Other News

.
Vietnam remains world’s largest producer, exporter of cashew nuts
Vietnam remains world’s largest producer, exporter of cashew nuts
BUSINESSicon  26/11/2020 

Vietnam has maintained its position as the world’s largest producer and exporter of cashew nuts in 2020, exporting an estimated 450,000 tonnes of cashew kernels worth 3.2 billion USD, according to the Vietnam Cashew Association (Vinacas).

Investors interested in LNG projects in Van Phong EZ
Investors interested in LNG projects in Van Phong EZ
BUSINESSicon  26/11/2020 

Many foreign and domestic companies are keen on building multibillion-dollar liquefied natural gas power and storage plants in the central province of Khanh Hoa.

Tens of thousands of hotel, bank workers at risk of losing jobs
Tens of thousands of hotel, bank workers at risk of losing jobs
FEATUREicon  26/11/2020 

The rapid development of technology is a threat to workers, as robots can now replace many hotel and bank officers.

E-commerce M&A activities ready to take centre stage
E-commerce M&A activities ready to take centre stage
BUSINESSicon  25/11/2020 

As brick and mortar shopping falls in popularity during the pandemic, online shopping platforms took have increased presence among Vietnamese consumers. 

Reasons that make Vietnam's real estate market appealing
Reasons that make Vietnam's real estate market appealing
BUSINESSicon  26/11/2020 

Economic and political reasons are major factors that make Vietnam a bright market.

Realty stocks are attractive: experts
Realty stocks are attractive: experts
BUSINESSicon  25/11/2020 

Though difficulties caused by COVID-19 were reflected in the business results of listed realty firms, experts are still optimistic about the market. ​

To take full advantage of free trade agreements
To take full advantage of free trade agreements
BUSINESSicon  26/11/2020 

To maximize the advantage of export opportunities from free trade agreements (FTAs), enterprises cannot but take into account the criteria for sustainable development.

Banks to deduct tax payments from clients’ accounts
Banks to deduct tax payments from clients’ accounts
BUSINESSicon  25/11/2020 

Banks will be able to deduct the tax payments of suppliers based in foreign countries—that conduct e-commerce or digital transactions with organizations and individuals in Vietnam—from their bank accounts,

Vietnamese farmers sell farm produce via smartphones
Vietnamese farmers sell farm produce via smartphones
FEATUREicon  25/11/2020 

An eel farm of an older man brings turnover of nearly VND10 billion a year, and 99 percent orders are online. Another farmer sold 26 tons of rambutan by contract after putting goods on online sale.

Aviation industry awaits new bigger bailout
Aviation industry awaits new bigger bailout
FEATUREicon  25/11/2020 

Private airlines including Vietjet Air and Bamboo Airways struggling to survive are looking forward for a new support package to maintain their operations.

Black Friday: World under Covid-19 bans, but Vietnamese excited
Black Friday: World under Covid-19 bans, but Vietnamese excited
BUSINESSicon  24/11/2020 

Around the world, Black Friday this year may be very dim because of Covid-19 pandemic. But in Vietnam, people are enjoying the safety of a "new normal", squeezing together to buy discounted goods at shopping malls.

Tax duties closing in for digital services
Tax duties closing in for digital services
BUSINESSicon  26/11/2020 

Vietnam’s ability to charge taxes from cross-border platforms may soon improve thanks to the Organisation for Economic Co-operation and Development’s new tax rules, focusing on expanding the country’s taxing rights  under international laws.

Vietnamese industrial market update – Rise of coastal industrial zones
Vietnamese industrial market update – Rise of coastal industrial zones
BUSINESSicon  24/11/2020 

The demand for industrial property at coastal regions is high, but the supply of industrial land ready to hand over in industrial zones in both regions was scarce.

Improved business environment is the key to FDI not tax and land incentives
Improved business environment is the key to FDI not tax and land incentives
BUSINESSicon  25/11/2020 

ASEAN countries need to choose between recovery based on wasteful competition for investment or coordination, cooperation, and joint hands to generate sustainable tax revenue to spend on health, education,

FDI possible in digital cross-border services
FDI possible in digital cross-border services
BUSINESSicon  24/11/2020 

With regional nations racing to lower their taxes in order to woo more investment, which may dent their coffers, creating feasible policies for collecting taxes is expected to help reach their goals of attracting more high-quality funding.

RCEP will not worsen trade deficit: ministry
RCEP will not worsen trade deficit: ministry
BUSINESSicon  24/11/2020 

The Regional Comprehensive Economic Partnership (RCEP) would not worsen the trade deficit Vietnam was running with signatory markets, according to the Ministry of Industry and Trade.

HCM City hopes to attract investment by allotting more lands in IPs, EPZs for infrastructure
HCM City hopes to attract investment by allotting more lands in IPs, EPZs for infrastructure
BUSINESSicon  24/11/2020 

HCM City authorities plan to offer competitive land rents and other incentives at industrial parks (IPs) and export processing zones (EPZs), and earmark more lands for building infrastructure to attract investment.

HCM City seeks ideas for underground space planning through international competitions
HCM City seeks ideas for underground space planning through international competitions
BUSINESSicon  24/11/2020 

The HCM City Department of Planning and Architecture has reported to the city People’s Committee on underground space planning and underground space management regulations.

RCEP will not make the trade deficit with China worse: MOIT
RCEP will not make the trade deficit with China worse: MOIT
FEATUREicon  24/11/2020 

Worries have been raised that RCEP will lead to a higher trade deficit with partners, especially China. But the Ministry of Industry and Trade (MOIT) doesn’t think so.

Lofty goals achievable through stable regulations
Lofty goals achievable through stable regulations
BUSINESSicon  25/11/2020 

The Ministry of Planning and Investment aims to have 15 Vietnamese private companies with market capitalisation of over $1 billion each by 2025, with that target increasing to 20 by 2030.

 
 
 
Leave your comment on an article

OR QUICK LOGIN