Vietnam plans to sell $1 billion of 10-year dollar-denominated bonds in an attempt to curb inflation, an expanding trade deficit, and a weakening national currency (the dong).
The sale could occur as early as this week with a coupon rate of not greater than seven percent, according to Vietnam’s central bank.
“The new issue should have an absolute yield of around 6.85 percent to 7 percent,” said Sergey Dergachev of Frankfurt-based Union Investments. “Vietnam is economically much weaker, with significant twin deficits and a highly managed exchange rate.”
The proceeds of the sale will help fund Vietnam Oil & Gas Group, Vietnam National Shipping Lines, Song Da Corp., and Vietnam Machinery Installation Corp., the State Bank of Vietnam said in a statement on their website.
The sale may also help the floundering Vietnamese dong which depreciated 5.4 percent last year against the dollar and is currently trading at VND18,420 to USD1.