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Government backs bonds for express highway
Local expressway constructor Vietnam Expressway Corporation (VEC) will offer VND500 billion in revenue bonds guaranteed by the Government, at the Hanoi Securities Trading Centre on August 20.
Revenue bonds are issued by a municipality to finance either a project or an enterprise in which the issuer pledged to the bondholders revenues generated by the operation of the project.
These latest 15-year revenue bonds are the first to be guaranteed by the Government. The bond issuance is part of a capital-mobilizing plan the corporation raised for the construction of the Noi Bai-Lao Cai Highway.
As planned, the Noi Bai-Lao Cai highway has a total investment of VND20.11 trillion. The 245-km long project will help link trade between remote and urban areas.
The toll charged by the highway, once in operation, will help pay back bondholders’ principal and interest.
According to the Hanoi Securities Trading Centre, the issuance of the Government-guaranteed bonds has created a new instrument of capital mobilization for infrastructure development on the local stock exchange.
As dictated by the Government, the bond will provide advantages for both the issuer and investors, the center added.
The Vietnam expressway Corporation will receive Government support during the bond issuance, in investment capital and payment guaranteed for bondholders as governed by the Finance Ministry.
Furthermore, the State will also help the corporation open a fund for bond payment. The fund will come from part of the money generated by the project, sent to the commercial bank as an account to ensure bondholders’ payment on time.
A flexible mechanism for bond interest will also be set up with the aim of ensuring the process of capital mobilization through bond auction.
“Government support will help increase investor’s attraction to this bond auction as interest pressures remain low, and the project’s risks are also minimized,” the center added.
VOV
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