Experts, officials agree with int'l bond issuance proposal

Nov 4th at 14:11
04-11-2015 14:11:38+07:00

Experts, officials agree with int'l bond issuance proposal

The Government's proposal to issue US$3 billion in international bonds may be the best solution to handle the country's rising national debt, said several vocal economic analysts and government officials.

 

In the middle of October, the Government proposed to the National Assembly that the country sell bonds on the international market as a way to restructure national debts arising in the 2015-2016 period. If the idea is actualized, it would be the first time Vietnamese bonds made it onto the global market.

However, public opinion has been mixed. Some worry that the move would be risky in light of the country's low economic performance, others worry about potential changes in the global financial market like the undecided US Fed rate and China's economic slowdown. Media reports cite uncertainty about the strength of foreign investor response.

Truong Van Phuoc, Deputy Chairman of the National Financial Supervisory Committee said that the international bond issuance was the best way for the Government to pay short-term debts.

He said that the bonds were low-interest loans that the government could use to payoff overhanging high-interest loans that are now due. The proposed bond terms, 10 to 30 years with interest rates set on international currency conditions at the time of issuance, could offset debt for decades with better terms.

He didn't deny that the $3 billion figure would have a direct impact on the country's public debts in the future, but he added that the Government had no other choice when facing considerable State budget issues caused by the country's low economic performance and a slow-developing private sector.

International bond issuance wasn't an abnormal solution, said Le Quang Hai, Deputy Director of SCS Audit Global and an analyst at Chartered Financial Analyst (CFA). He said they were often used by other economies to make payment on short-term loans.

The bonds would increase capital flow needed to pay loans that are due, he said, adding that the only issue was when and how the Government sells the bonds.

If Viet Nam delayed making the move, it might face both higher debt and higher interest rates if the US central bank raised its interest rate in the next year.

Deputy finance minister Do Hoang Anh Tuan told local media that $3 billion was the maximum value the finance ministry proposed.

He said that the plan was not to sell all $3 billion immediately; the issuance would be spread out throughout the next year.

bizhub



NEWS SAME CATEGORY

Bank sells $244m of 3, 5, 10-year bonds

Three-year bonds were sold out, while the sales of bonds with longer terms were unsatisfactory during an auction on the Ha Noi Stock Exchange last week.

Short-term bonds sell out, long-term bonds unsalable

Three-year bonds were sold out, while the sales of bonds with longer terms were unsatisfactory during an auction on the Ha Noi Stock Exchange on October 29.

Borrowing $3bn via sovereign bonds doesn’t affect Vietnam’s national debt: official

Vietnam’s intention to raise US$3 billion worth of sovereign bonds overseas in two years is meant to restructure short-term debt locally, not affecting the total...

NA's committee backs $3 billion of int'l bond sales

The National Assembly's Committee for Finance and Budget approved the government's proposal to sell international bonds worth US$3 billion to restructure domestic...

Record-breaking bond issuance to restructure debts

The government’s plans to issue the largest-ever cluster of international bonds worth approximately $3 billion has been positively deemed by experts despite recent...

Vietnamese government seeks legislative nod to issue $3bn in sovereign bonds in 2017

The government is seeking the permission of the law-making National Assembly to issue US$3 billion in sovereign bonds in 2017, local media reported.

Failing to issue bonds, MOF plans to borrow from Vietcombank

Sources said the Ministry of Finance (MOF) is planning to borrow one billion US dollars more from Vietcombank, one of Vietnam’s largest commercial banks, at the...

New, flexible bond to be issued against banks' bad debts

The Vietnam Asset Management Company has begun to issue a new class of bond against bad debts it buys from credit institutions, one that can be traded between the...

Government suggests $3 billion int'l bond issuances

The government has suggested international bond issuances worth US$3 billion, to restructure domestic debts arising during 2015-2016.

Gov’t to issue bonds in international market

The Government has agreed on a plan to issue bonds in international capital markets in 2015 as proposed by the Ministry of Finance, according to a Resolution.


MOST READ


Back To Top