Several Vietnamese corporations are considering issuing their bonds on international markets following the success of the government’s US$750 million bond issuance last year.

At the recent Viet Nam Investment Forum, domestic and international investors suggested the time had come for Vietnamese corporations to issue their own bonds. "We believe Vietnamese corporate bonds would be attractive for international investors if they were issued on international capital markets," said a representative from Eiger Capital Limited.

Vice Chairman of the Viet Nam Shipbuilding Industry Corporation (Vinashin) Nguyen Quoc Anh said last year’s $750 million bond issuance satisfied only one third of the company’s requirement for investment capital. He said Vinashin plans to issue its own bonds this year, although it has not released specific details.

Electricity of Viet Nam (EVN) said it needs to raise $109 billion over the next 20 years to meet the nation’s increasing demand for power. EVN General Director Dao Van Hung said because the corporation has had difficulty sourcing capital from the State Budget and from domestic and international bank loans, it is seeking capital from the sale of shares from its equitised affiliates or issuing bonds.

Vietnam Airlines also revealed it is considering a plan to issue bonds on local and international markets, and will submit a proposal seeking governmental approval.

The Bank for Foreign Trade of Viet Nam (Vietcombank) announced it would underwrite and offer consultation services for large Vietnamese companies planning to issue bonds on international markets. The bank’s general director Vu Viet Ngoan said lacking prestige or credit on international markets, even the nation’s largest corporations required professional consultation services and financial underwriters for bond issuances. "Bonds issued by Vietcombank on behalf of corporations will be more successful because the bank has an established credit rating on international markets," Ngoan said.

However, he warned expenses for international bond issuances were high, ranging from 1.5 to 10 per cent of the total face value of the bonds issued. "Also, corporations must satisfy auditing standards and disclose detailed financial information to international investors before insurance," he added.

An official from Eiger Capital Limited agreed, adding that Vietnamese corporations issuing international bonds should carefully consider the amount of capital to mobilise. "If corporations want to mobilise $300-400 million, they need to issue bonds on international markets. But because of the high costs involved, those companies seeking to raise capital totalling under $100 million should reconsider international issuances," he warned.

Furthermore, companies must be mindful of the obligations of major bond issuances, he said, citing the $750 million government bond issuance last year. With an interest rate of 7.15 per cent per annum for a 10-year term, debtors must disburse a total of $536 million in interest before the bonds mature.

VNS