Vietcombank Bonds to Go on Bourse in June

The Bank for Foreign Trade of Vietnam, known as Vietcombank will officially list convertible bonds in June, said Vietcombank’s general director.

 

The bank is completing the listing document to submit to the State Securities Commission (SSC).

 

The Hanoi-based bank reportedly issued VND1.365 trillion worth of convertible bonds with a par of VND100,000 since December 2005. These seven-year bonds carry a coupon of 6 per cent.

 

Additionally, Vietcombank is hastily completing hiring an international consultancy firm specializing in appraising corporate value, analyzing business activities and building plans to raise capital as well as issue shares.

 

According to Vu Viet Ngoan, Vietcombank’s general director, Vietcombank has proposed the equitisation steering board select an international consultancy organization. Upon receiving approval, the bank will kick off the aforementioned scheme from the start of June.

 

Recently, the government has asked Vietcombank in August at the latest to submit the equitisation project to the Prime Minister for approval.

 

“Currently, there are two different opinions on Vietcombank’s equitisation. Some said that Vietcombank should chose strategic investors first and then issue initial public offering shares (IPO). Some others proposed the bank offer IPO first and chose the strategic investors later. If following the second way, Vietcombank will complete equitisation in May or June 2007. Or if choosing the first way, share issuance would be delayed,” said Ngoan.

 

“The bank will decide the specific plan when the international appraisal officially starts,” added Ngoan.

 

Vietcombank would be allowed to convert the whole convertible bonds into equity when the remaining maturity of bonds, since the bank officially equitized, must be five years or more. If the remaining maturity is less than five year, the bank will have to deduct 20 per cent of the value of the convertible bonds for each year which the bank fails to meet the required timeframe of five years.

 

Reportedly, Vietcombank planned to equitise since March 30, 2004. However not until September 21, 2005, did the government officially permitted the bank to conduct the equitization process. In December 2005, the bank issued VND1.365 trillion worth of convertible bonds. These bonds will be supplemented to Vietcombank’s equity wherein boosting the financial capacity of the bank improving the capital adequacy ratio before Vietcombank identifies its corporate value.