The State Bank of Vietnam has given the green light to a bond issue worth VND3.25 trillion (US$205.7 million) scheduled by the Bank for Investment and Development of Vietnam (BIDV) in a bid to scale up the bank’s capital, state media reported.
BIDV, the fourth-largest of Vietnam's five state-run commercial banks, will trade the bonds in different phases via auctions at the Hanoi and HCM City securities trading centers, Vu Quoc Sau, the banks’ executive chairman said.
BIDV will re-purchase the papers five years a head of maturities, Sau stressed.
The chairman also affirmed that such an effort to scale up equity is a step to promote the bank’s financial capacity, accordingly preparing conditions for BIDV’s equitization roadmap.
Accordingly, this state owned bank schemed to start issuing VND1,250 billion (US$78.8 million) worth of bonds in both VND and foreign currency for the first phase in April.
These bonds have maturities of 10-15 years.
Unlike convertible bonds of the Bank for Foreign Trade of Vietnam (Vietcombank), BIDV bonds cannot be converted into shares when BIDV is officially equitized.
“Most of the bond volume is underwritten via prestigious organizations and particularly bond coupons will be attractive enough to lure potential investors,” said Le Dao Nguyen, BIDV’s vice general director.
The bond coupons have not yet been fixed but would be based on coupons of government bonds, according to the executive chairman.
All individual and institutional investors can buy BIDV’s bonds. As for the bonds issued for the first phase, individual investors are only allowed to acquire the foreign currency bonds via retail sale channels.
According to Nguyen, many organizations of which most are financial groups such as banks and insurance companies, are eager to buy the debt papers.
Hanoi-based BIDV said the bank planned an initial public offering (IPO) in the third quarter of 2007.
It is reported that BIDV has registered capital of VND3.9 trillion (US$245.7 million) and its assets increased to VND132 trillion (US$8.3 billion) by the start of this year from US$6.6 billion at the end of 2004.
The bank submitted to the State Bank of Vietnam a plan on issuing the debt bonds in January.
BIDV is the third state owned commercial bank to have undertaken a equitization scheme, following the Bank for Foreign Trade of Vietnam (Vietcombank) and the Mekong Housing Development Bank (MHB).
Regarding BIDV’s elderly brother, Vietcombank, the bank cannot list the convertible bonds in the stock market in March as planned, saying, auditing the bank has not yet been “ready,” said Nguyen Thi Bich Lien, director of Vietcombank’s securities division in charge of listing.
Vietcombank would apply to list the convertible bonds next month, added Lien.
Vietcombank last December issued VND1.38 trillion (US$87.3 million) worth of convertible bonds via auctions and retail sales. These debt papers will be converted into common shares when the bank is officially equitized.
Presently, Vietcombank’s convertible bonds change hands at some VND140,000 a share on a par of VND100,000 in the unofficial market.
VnExpress, Reuters, Saigon Times Daily
Vietnamese
