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Banking & Finance

VPBank issues $300mn in international bonds

Released at: 13:13, 13/07/2019

VPBank issues $300mn in international bonds

Photo: VPBank

Vietnamese bank successfully prices bonds under $1bn EMTN Program.

by Hung Cao

The Vietnam Prosperity Joint Stock Commercial Bank (VPBank) announced on July 12 it has priced three-year international bonds with a value of $300 million guaranteed by BNP Paribas, JP Morgan Chase, and Standard Chartered Bank.

The notes were 6.25 per cent (nominal) and distributed to Asian and European investors at a proportion of 52 per cent and 48 per cent, respectively.

This marks the largest volume and record-low coupon attained by a non-sovereign Vietnamese issuer on the global market. VPBank’s notes are non-convertible, unsecured, and listed on the Singapore Stock Exchange (SGX-ST). Investors’ bids tripled the issuer’s ask volume.

VPBank will utilize the proceedings to improve its financial capacity, enhance operational safety, and supplement its funding mix to meet medium- and long-term loans or other purposes as set out in the applicable Pricing Supplement.

Unlike other one-time issuances by other issuers, this was the first drawdown under the $1 billion Euro Medium Term Note (EMTN) Program of VPBank within 12 months.

This also marks VPBank’s footprint in the EMTN international playground and makes it more flexible and proactive in the next drawdown in light of market conditions as well as the bank’s needs. Investors also greatly appreciated VPBank’s participation in the program.

Vietnamese banks are seeking to raise capital in international bond markets as they face growing pressure to raise capital to satisfy the State Bank of Vietnam’s regulations on minimum capital requirements and Basel II standards by early next year.

Tien Phong Bank (TPBank) is also seeking shareholder approval for the issuance of $200 million in foreign currency bonds this year. Opinions were sought between June 28 and July 12.

Last year, the Ho Chi Minh Development Joint Stock Commercial Bank (HDBank) also planned to issue $300 million in convertible bonds with a fixed interest rate for five years to less than 100 investors in 2019.

Issuing international bonds is new to many Vietnamese banks as they are used to seeking foreign capital through trade finance or trade credit agreements with major foreign financial institutions. Last year, LienVietPostBank received a $50 million loan from JPMorgan Chase Bank’s Singapore branch.

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