VietNamNet Bridge – The information that VietinBank, one of the biggest commercial banks in Vietnam which has been equitized, is planning to issue international bonds and has surprised financial analysts, because it is not the ideal time to do that now.
On March 19, VietinBank began a series of roadshows in foreign countries to prepare for the bond issuance in the international market. The events have caught the special attention from both the Vietnamese and international communities.
The Financial Times has commented that the success of VietinBank in the issuance could show how the international community thinks about the Vietnamese national economy.
The bank plans to issue 500 million dollars worth of international bonds with the consultancy of two big banks Barclays and HSBC. The roadshows to introduce about the issuance would take place in Singapore, Hong Kong, London, Boston, New York, Los Angeles and San Francisco.
The article “Vietnam: Anyone for state-owned debt?” published on the Financial Times commented that the bond issuance takes place in a sensitive moment, when Vietnamese banks, after many years of pursuing the hot credit growth and making mistakes in financial management, have been put in a worrying situation. Therefore, the government of Vietnam has recently announced a plan to restructure the banking system.
Especially, VietinBank decided to issue bonds after other Vietnamese state owned enterprises did not obtain the expected success when issuing bonds in the international market. The Vietnam Coal and Mineral Industries Group (Vinacoal) and the Electricity of Vietnam (EVN) have been facing difficulties when raising funds in the world market after the Vietnam Shipping Industry Group (Vinashin), also known as a big conglomerate, bogged down in debts in late 2010.
The article on the Financial Times also wrote that the Vietnamese economy is still facing big challenges, even though it has witnessed some recovery signs.
Many Vietnamese people have also expressed their surprise to the decision by VietinBank to issue shares at this moment, when the debt crisis in Europe has yet come to an end, which means that it would be very difficult to persuade investors to spend money on Vietnamese bonds.
However, it’s still unclear if VietinBank can be luckier than EVN and Vinacoal in seeking capital in the international market. Standard&Poor’s và Moody’s both seem to believe that VietinBank would succeed more than the two said economic groups.
Moody’s late last week gave B1 to VietinBank’s long term credit, while S&P gave B+ to the bonds to be issued by the bank. Though both the credit ratings firms mentioned the concern about the asset quality of the bank, they believe that the bank has a big advantage thanks to the big operation scale and the support from the government.
In related news, the plan of VietinBank to sell shares to the foreign strategic partner Nova Scotia from Canada in the first quarter of 2012 has failed completely.
Dau tu quoted its sources as saying that the two banks agreed on all the terms of the share transfer. However, right before the money remittance schedule, Nova Scotia unexpectedly set up a new condition which has made the affair unrealistic.
Nova Scotia demanded to enjoy all the 2011’s dividends and the capital surplus. Prior to that, VietinBank and Nova Scotia agreed to the share price at 22,000 dong per share. Meanwhile, if the newly set up condition is satisfied, the actual price of VietinBank shares would be 19,000 dong per share only.
VietinBank’s President Pham Huy Hung said the requirement is unreasonable, because Nova Scotia planned to remit money in the first quarter of 2012, while it wanted the dividends for 2011.