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Vietnam to issue $1 bln domestic dollar bonds
The Vietnamese government has approved the issue of government dollar bonds to raise around US$1 billion on domestic markets to pay for big state projects and offset a budget deficit.
The Ministry of Finance and the central bank are assigned to set time and other details of further debt sales, the government said in a statement, after it had raised $230 million in three dollar bond auctions in March.
The statement gave no further details of the dollar bond issue, but earlier this month the government asked the finance ministry to plan sovereign dollar bonds, with the value of each issue of at least $500 million.
Prior to the March auctions the central bank asked domestic and foreign banks about their targets for coupon and maturity and the volume of bonds they expected to buy between March and May.
But the government has held no more dollar bond auctions since March 27, when it sold $50.1 million of three-year bonds at an annual yield of 3.6 percent, or half of the target debt on offer.
Proceeds from bonds often go to the construction of schools, highways and bridges. This year funds are also much needed for a raft of stimulus measures aimed at ensuring annual economic growth hits a government target of 5 percent to 5.5 percent.
The State Treasury's dong bond auctions have mostly failed since February, raising concerns about how Hanoi will fund a budget gap which could widen to about a tenth of gross domestic product.
In late May the government had asked the National Assembly for approval to raise the 2009 budget shortfall target to 8 percent of GDP, from 5 percent initially projected.
The fiscal deficit was at 4.7 percent in 2008 and 5.5 percent in 2007.
Vietnews, Reuters
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