VietNamNet Bridge - PetroVietnam Exploration Production Corporation Ltd (PVEP) has signed a syndicated loan of US$430 million with 14 foreign banks.

The loan, which carries an undisclosed interest rate, matures in 2015. It will be used to fund PVEP's general corporate affairs and capital expenditure requirements.

The loan amount was originally $300 million. However, it received total commitments of $430 million from 14 international institutions, reflecting an over-subscription rate of 43 per cent.

The loan was fully underwritten by Standard Chartered, which also acted as the original mandated lead arranger and bookrunner for the loan.

Standard Chartered is also the facility agent, onshore paying agent and documentation agent.

The senior-mandated lead arrangers are the Bank of Tokyo-Mitsubishi UFJ, the Singapore Branch of BNP Paribas, Mizuho Corporate Bank, the Overseas-Chinese Banking Corporation, Sumitomo Mitsui Banking Corporation, Cathay United Bank and Intesa Sanpaolo SpA.

Chinatrust Commercial Bank, Maybank International, the Singapore Branch of the Bank of Taiwan, the Singapore Branch of Chang Hwa Commercial Bank, the Offshore Banking Branch of First Commercial Bank, the State Bank of India and the State Bank of Singapore are the lead arrangers.

In recent months, ANZ, Standard Chartered Bank, International Finance Corporation, the World Bank and the Asian Development Bank have made loans available to Vietnamese enterprises and commercial banks.

The No 6 Bulletin issued by the Ministry of Finance this week showed that Viet Nam's sovereign debt rose to $29 billion, as of June 30, 2010, from $27.9 billion at the end of 2009 – equivalent to about 28 per cent of Viet Nam's GDP of $104 billion last year.

Of the amount, Government debt accounted for $25 billion, while borrowing by State-run companies and organisations was $4 billion. The country is expected to repay $1.1 billion this year.

In the first quarter of last year, the Government and State-run companies and organisations paid $329 million in principal, interest rates and costs. In the whole of 2010 they paid some $1 billion in principal and interest.

If the country takes out no further foreign loans, Viet Nam's debt repayment will be $1.7 billion in principal and more than $250 million in interest up to 2016.

The ministry said the debt remains within a "safety threshold".

It is an appropriate level considering the country's development strategies and is eminently manageable, said Nguyen Thanh Do, head of the Department of Debt Management and External Finance.

Viet Nam has punctually paid its debt since 1993, he added.

However, since the US dollar is also appreciating against the dong, the need to buy US dollar or to buy yen for debt servicing may lead to problems.

Source: VNS