FDI News

HSBC is first foreign bank to issue bonds in VN

VGP - HSBC Bank (Viet Nam) Limited has issued VND600 billion (US$25.7 million) worth of bonds, becoming the first foreign bank to do so in Viet Nam.

HSBC is first foreign bank to issue bonds in VN

The bonds have a coupon rate of 5.8% and a tenor of three years. The lender said the issuance was oversubscribed.

Tim Evans, general director of HSBC Viet Nam said that “On the 150th anniversary of the establishment of HSBC in Viet Nam, this bond issuance affirms the bank’s long-term commitment to the country. We expect to play a pioneering role in the continuous development of Viet Nam’s businesses and capital market. We plan to regularly issue bonds in the market, continuing the goal to be the leading international bank in Viet Nam.”

According to Tim Evans, the proceeds in this issuance will be used by HSBC Viet Nam to increase the bank’s working capital, diversify the dong capital sources in order to serve the sustainable business growth of the bank in the near future.

Its country head of global markets Ngo Dang Khoa said Viet Nam is among the fastest-growing bond markets in Southeast Asia with issuances accounting for 9.01% of GDP in 2018 and 11.3 % last year.

But it is still small compared to 20-50% in other Asian countries like South Korea and Singapore, he said.

So the country needs to do more to encourage investors to buy bonds, and make its legal framework more comprehensive, he said.

Corporate bond issuances rose by 50% year-on-year in the first six months of the year to VND159 trillion ($6.8 billion), according to the Hanoi Stock Exchange. Over 59% of it was by banks and property developers.

The government recently made moves to tighten bond issuances amid concerns that companies will not be able to repay their debts.

It issued a new decree limiting companies to two issuances a year and to a total value of five times their equity.

HSBC has a long history of supporting Viet Nam’s capital market through its active participation in the market.

By October 2009, the bank mobilised VND8.412 trillion on the bond market in dong, including the bonds for the Viet Nam Electricity Corporation (EVN), Viet Nam Technological and Commercial Joint Stock Bank (Techcombank), and Commercial Joint Stock Bank for Investment and Development of Viet Nam (BIDV).

In May 2013, HSBC was the co-book-building bank and main manager for the international bond issuance transaction of Commercial Joint Stock Bank for Industry and Trade of Viet Nam (VietinBank) worth US$250 million.

In 2014, HSBC was the book-keeping bank and in charge of offering Vietnamese government bonds in the successful issuance of 10-year international bonds in US dollar with a total value of US$1 billion.

                                                                                                By Hoang Ha