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Government reportedly readies big bond sale   2009-11-03 - Reuters

According to a Reuters report, Vietnam is about to float its second big international bond issue. 


Reuters quoted a finance ministry official as saying that the nation hopes to raise $1 billion by early next year by selling dollar-denominated bonds that will cap the coupon at 7 percent.


The ministry wanted to sell 10-year dollar bonds before the end of the year but there might not be enough time to do so.  "Most of the money, about $700 million, is to supplement the government’s budget and the rest will be loaned to state-owned companies," said the official, who Reuters says chose to remain anonymous.


With the economy under pressure from the global slump, and the government extending parts of an economic stimulus package, many economists forecast the fiscal budget deficit will expand to 10 percent of GDP or larger, more than double last year’s.


Questions have persisted for months about how the government would fund the deficit. Domestic dong-denominated government bond auctions have struggled this year, with the finance ministry’s yield ceiling too low for the market.


Vietnam is also trying hard to boost its foreign exchange reserves and said last month it would borrow $1 billion from the World Bank this year and next, and also $1 billion annually from Japan from 2010 to 2012.


The government had already approved the bond sale and has chosen Barclays Capital, Citigroup and Deutsche Bank to advise on the issue.


Vietnam’s only foray into the international capital market was in 2005 when it sold $750 million worth of sovereign bonds maturing in 2016. Those bonds were trading with yields of 6.3-6.4 percent, compared with the original coupon of 6.75 percent, a bond trader said.


Two years ago the government approved another issue worth $1 billion but the sale has been delayed several times.

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