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Government plans to sell dollar bonds to fund important projects
The government plans to sell US dollar-denominated bonds this month to raise funds to help stem an economic slowdown, according to a statement released by the Ministry of Finance Tuesday.
The ministry and the central bank would soon decide on the value of the sale and the coupon rate so that the bonds can be issued before March 15, it said.
The country is “having difficulties in foreign currency for some important investment projects,” Deputy Minister of Finance Nguyen Cong Nghiep said at a press briefing.
Prime Minister Nguyen Tan Dung approved the sale of the debt in the local market, according to a February 14 statement posted on the government’s website.
The central bank has ordered commercial banks to prepare funds to buy dollar bonds.
The banks should “coordinate closely with the State Bank of Vietnam's Foreign Exchange Department and Ministry of Finance in the debt issues to ensure the success of the bond issuance,” Deputy Governor Nguyen Van Binh said in a letter to them Monday obtained by Reuters.
Fixing of dollar one-year lending rates stood at 2.55 percent on Monday on the interbank markets, down from 2.59 percent a week ago, according to Reuters data.
VND55 trillion bond issue Ok’ed
The National Assembly has approved a plan to raise VND55 trillion (US$3.15 billion) by selling bonds this year to fund extra spending and bolster economic growth.
The government will sell VND11.5 trillion more than the originally planned VND43.6 trillion, of which VND7.7 trillion was carried over from last year. The Ministry of Planning and Investment submitted the proposal, according to a statement dated Tuesday and posted on the Vietnam Banks Association’s website.
“The approval will increase the supply in the debt market and the government bond yields are expected to keep rising in the short-term,” said Tran Kieu Hung, a Hanoi-based trader at Bank for Investment & Development of Vietnam.
The yield on the benchmark five-year note climbed 0.04 percent to 8.98 percent yesterday, the highest level since January 14, according to a daily fixing price from seven banks compiled by Bloomberg.
Vietnam needs funds to revive its economy, which last year expanded at the slowest pace since 1999. The government is preparing an economic stimulus package of as much as $6 billion, some of which woud be raised through bond sales, Nguyen Duc Hoa, deputy minister of Planning and Investment said December 31.
The state treasury said February 4 that it may increase local-currency bond sales by 6 percent to VND22 trillion in the first quarter to fund the stimulus measures.
The economy would worsen in 2009 as the global financial crisis deepens, Prime Minister Nguyen Tan Dung said February 4.
Reuters, Bloomberg, Thanh nien
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