return icon

Vietnam mulls swapping sovereign bonds with debts for the third time

VietNamNet Bridge – Viet Nam is considering issuing US$1 billion in sovereign bonds for the third time to swap with debts that are becoming due next year. But the proposal still needs to be evaluated based on potential cost,

VietNamNet Bridge – Viet Nam is considering issuing US$1 billion in sovereign bonds for the third time to swap with debts that are becoming due next year. But the proposal still needs to be evaluated based on potential cost, use of national resources for commercial purposes and debt payment capacity.


Viet Nam is considering issuing US$1 billion in sovereign bonds for the third time to swap with debts that are becoming due next year.— Photo nguoiduatin




A consensus has so far been reached within the Government regarding the plan for a third sovereign bond-for-debt swap. This is the second time in two years that the Government has discussed the issuance of international bonds.

Viet Nam's GDP growth rate is expected to reach 5.54 per cent by end-September and reach 5.8 per cent by year-end.

At a government press conference last month, Nguyen Van Nen, head of the Government Office, said Viet Nam had about 1$ billion in outstanding sovereign bond debt that would need to be converted.

Viet Nam borrowed the money at high interest rates and could now borrow again at lower cost to reduce the amount of interest, Nen added.

Economists said swapping debts would make international investors think twice because a company or Government would often consider using this measure whenever faced with problems.

Economic expert Vu Dinh Anh told vneconomy that a sovereign bond-for-debt swap was likely to be the last resort, as a new $1-billion sale may pay for the maturing $750 million in bonds issued in 2005. That means the other $1 billion in bonds which will mature in 2020 may require another bond-for-debt swap if Viet Nam didn't have a sound strategy to pay for the debt.

In 2005, Viet Nam raised $750 million from its first dollar-denominated bond sale at a 7.125 per cent annual yield. The 10-year loan went to the formal debt-laden Vinashin, now known as Shipbuilding Industry Corporation (SBIC).

In 2010, the country borrowed $1 billion from its second sovereign bond sale at a 6.75 per cent annual yield, and this was lent to key State-owned economic enterprises.

Independent analyst Bui Kien Thanh said the use of the loans must be clearly projected and monitored strictly to avoid mismanagement of national resources.

But quoted VPBank Securities's report (VPBS) as saying that both LIBOR and margin interest rates for sovereign bonds have declined since the beginning of the year, and this was supposed to benefit Viet Nam's bond sales.

In principle, the government of a country with an unstable economy tends to denominate its bonds in the currency of a country with a stable economy. Because of default risk, sovereign bonds tend to be offered at a discount.

VPBS reported that the yield of 10-year Government bonds in US dollars fell to 4.5 per cent this September from 6.1 per cent at the beginning of 2010. The rate is lower than the 7.86-per cent annual yield of a 10-year Government bond in dong.

The United States Federal Reserve (Fed) and the European Central Bank (ECB) will likely keep rates on hold until 2015, but ultimately the Fed may have to raise the rate when it faces higher inflation pressure, which will distract investors from emerging markets like Viet Nam, VPBS said.

VPBS argued that if Viet Nam won't make the bond sale now, the opportunities would go by and the degree of success would be lower.

In response, Thanh said: "When talking about the possibilities of taking advantage of lower costs this time, we should remember that the interest rate is not the only issue that a sovereign bond issuance must take into account. It evidently includes other factors such as variety, costs of underwriting, issuance and consultancy."

Also, quoted Rong Viet Securities as saying that though Viet Nam's 10-year sovereign bond yield declined since the beginning of the year, it was still higher than that in 2005 and 2010.

Securities companies advised the Government to issue sovereign bonds for debt swaps, since it was hard to offer lower yields. They also urged the Government to be cautious about issuing the bonds because the international bond market may change quickly.




Ngoc Linh ginseng helps Central Highlands locals out of poverty

Growers in the Central Highlands provinces dreamed of escaping poverty when they planted Ngoc Linh ginseng which has made an economic contribution to improving local farmers’ living conditions.

Soc Trang’s Khmer pagoda features giant Buddha statue

With the long-standing bonds of the Kinh, Khmer, and Hoa ethnic groups, Soc Trang boasts a special cultural identity that makes it an outstanding spiritual destination for tourists and Buddhist followers from far and wide.

Smart-homes getting cheaper in Vietnam

In Vietnam, a smart-home installation package costs VND14-25 million.

Vietnamese nationals account largest proportion of Japan’s foreign worker population

Vietnamese nationals account for 25.4% of the total 1.82 million foreign workers who were working in Japan as of the end of October last year, according to the Japanese Ministry of Health, Labour and Welfare (MHLW).

Mekong Delta develops more OCOP products

The Cuu Long (Mekong) Delta’s 12 provinces and the city of Can Tho are developing more products under the country’s “One Commune-One Product” programme.

Major Vietnamese paintings worth millions of dollars at global auctions

2022 represented a successful year for the Vietnamese painting market as three more pieces were auctioned at more than US$1 million each, bringing the total number of valuable paintings to 19. Let’s take a closer look at some of them.

Vietnamese American singer brings Tet Holiday joy to disadvantaged children

In hope to bring the children who lost their parents because of Covid-19 a warm spring holiday, Vietnamese American singer Ha Phuong spent a day to enjoy Tet with them.

How will the economy fare in 2023?

Vietnam’s economy had a prosperous year in 2022 with GDP growth rate of 8.02 percent, a one-decade high.

Female Vietnamese badminton star Thuy Linh placed 50th in world rankings

Vietnamese badminton star Nguyen Thuy Linh has risen to 50th position in the world’s latest singles women rankings, according to the Badminton World Federation (BWF).

Phin Ho ‘shan tuyet’ tea –specialty of Ha Giang

Apart from stilt houses and seemingly endless terraced paddy fields, “shan tuyet” tea, a famous specialty of Phin Ho village, is one of the special things visitors cannot forget once setting foot in Tay Con Linh Mountain in Ha Giang.

Discovering art of making vegetarian dishes in Tay Ninh

Religions and beliefs have made considerable contributions to the culinary culture of Tay Ninh.

Hoi An, HCM City among world's top 25 trending destinations in 2023: TripAdvisor

Germany’s famous travel site has run an article highlighting the world’s top 25 trending destinations for 2023, including Vietnam’s Hoi An ancient city and Ho Chi Minh City, recently voted by readers of TripAdvisor.

Make-in-Vietnam sleeping machine developed by professor

FRENZ Brainband helps users have faster, tighter and deeper sleep. It can also be used for relaxing and enhancing concentration when working.

Paris Agreement: Lessons on independence, self-reliance, int’l solidarity

The signing of the Paris Agreement on ending the war and restoring peace in Vietnam on January 27, 1973, was a resounding victory of Vietnam’s revolutionary diplomacy in the Ho Chi Minh era.

PM: Lunar New Year comes with new energy

Prime Minister Pham Minh Chinh chaired a meeting of permanent Cabinet members in Hanoi on January 27, speaking of new energy of the nation following Tet (Lunar New Year), the biggest festival in Vietnam.