The state-run Vietnam Oil and Gas Group (PetroVietnam) will delay a plan to sell $1 billion worth of corporate bonds in the international market, which was slated for the fourth quarter of 2010, a senior official said.
The bond sale in the U.S. market will be halted due to unfavorable conditions of global economies, the group’s Chairman Dinh La Thang said at a press briefing Jan 4, adding the delay came after two Vietnamese state-run groups also broke their issuing plans.
Earlier in November, Vietnam National Coal-Mineral Industries Group (Vinacomin) postponed the $500 million ten-year bond sale overseas amid increasing concerns over debt crisis in Europe and prediction on global investors’ less appetite for risk-contained assets.
The Electricity of Vietnam Group (EVN), meanwhile, also failed to carry out its project to sell $1 billion bonds abroad, scheduled in the fourth quarter.
Two international leading rating firms of Moody’s and Standard & Poor’s cut Vietnam’s long-term foreign currency sovereign credit rating in December after the state-run shipbuilding giant Vinashin failed to pay first $60 million debt to creditors.
Standard & Poor's also lowered its long-term credit rating on Vinacomin to BB- from BB, also citing the impacts of the Vinashin case, given the government may not be ready to give financial assistance to the company in case of troubles.
Analysts said the downgrade would cost these groups more to borrow funds overseas, meaning that bond yields must be very high to attract investors.
Thang said PetroVietnam will need up to $5 billion-$6 billion for its projects in 2011, of which only 30% is its equity. However, the group will consider other alternatives to raise funds, he added.
In early 2010, the government allocated a large pie of the $1 billion fund raised from ten-year bond sale in New York in January to PetroVietnam-run Dung Quat oil refinery plant. (Saigon Economic Times, Vnexpress)
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