Vietcombank considering maiden public offshore bond issue: sources

[HANOI] Vietcombank, Vietnam’s largest lender, is discussing plans with foreign investment bankers to issue its first-ever public offshore bond, three people familiar with the talks said.

The move comes as the government also weighs its first overseas bond in more than a decade, and as domestic rivals rush to tap overseas funding to meet growing loan demand driven by the ruling Communist Party’s push for economic growth and infrastructure spending.

State-controlled Vietcombank is still finalising its plans, the three banking industry sources said, speaking on condition of anonymity because the information was not public.

One source said that the bond would be denominated in US dollars, could be issued between November and March, and may raise US$300 million.

Vietcombank did not respond to a request for comment.

One of the sources said that Vietcombank had flagged in internal meetings that the transaction could help test investor appetite ahead of a potential future offshore sovereign bond sale by the government.

A second source disputed the account, saying the corporate bond had no connection with the government’s plans.

A Vietnamese state official said that Vietcombank has been advising the government for months on a possible offshore sovereign bond issuance. The bank has publicly urged the government to issue offshore sovereign bonds to meet domestic funding needs.

Interest rates are higher for corporate bonds than for syndicated loans, which are traditionally Vietnamese banks’ preferred tool to raise funds overseas.

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Vietcombank has said that it plans to boost capital buffers amid tighter requirements and rapid credit growth. It has announced plans to issue new shares and loss-absorbing dong-denominated bonds, and is considering a private share placement, in transactions worth roughly US$1 billion in aggregate.

Vietnam’s finance ministry said earlier this month that it planned a roadshow to gauge foreign investors’ interest in the country’s sovereign bonds.

No immediate sale is expected as the government continues to assess market conditions at a time of rising global bond yields, the ministry added.

A separate source told Reuters last week that Japanese banks had also approached the ministry about a possible “samurai” yen-denominated bond sold to investors in Japan.

The finance ministry and the central bank did not respond to requests for comment.

The search for foreign capital is being largely driven by private banks which have signed offshore loan agreements worth more than US$2.7 billion in aggregate this year, according to public announcements.

In addition to the signed deals, private lender Techcombank told Reuters that it had obtained regulatory approval for a US$1 billion offshore loan that could be expanded if needed.

MB Bank, a military-controlled lender, is also considering obtaining loans worth roughly another US$500 million by the year’s end, three people familiar with the plans said, after it raised US$550 million through offshore borrowing earlier this year.

MB Bank did not respond to a request for comment. REUTERS