Why does The Ministry of Finance want the Government to mobilize long-term investment once more at the moment?

The Government wants enterprises to issue bond in international market. However, enterprises’ preparation such as the ability to evaluate the confidence coefficient, the financial ability, and audit... aren’t ready. Meanwhile, capital requirement is very urgent, especially large project.

After considering, the Government saw market conditions would benefit to issue bond in international markets and approved the project. The Government will sell the bond and re-lend the proceeds to Vietnamese companies instead of using money to balance the sate budget.

The capital raised will go toward financing several major projects, including the Dung Quat Oil Refinery, the Hydro-Electric Power  development and the purchase of a new vessel for the Viet Nam National Shipping Lines Corp (Vinalines).They’re the reasons why the Government issues bond once more.

EVN and PetroVietnam planned to issue bond in overseas markets before. How will its effect on this plan?

Actually, nothing will change; these enterprises can still deploy their project. The Ministry of Finance hasn’t received any plan show that enterprises are preparing. So they’re not sure to issue in 2007, may be in 2008 when everything is ready to enter overseas market. On the other hand, the project listed by the Government as loan recipients are urgent, so right within this year the Government will proceed with the issue on international markets

Can you tell more clearly about the date of issue and the expected interest rate?

The interest rate will base on international market rates on the date of issue, to make sure “standard interest rate” in USD. We can’t set up immediately but it will better than the first.

The debt would be issued in the last quarter of 2007.

How were the conditions issue acknowledged?

This year, the confidence coefficient raised would benefit good conditions and impact on the interest rate effectively.

And the market is also very good. The national foreign debt rate is only 31 percent of GDP and if more debt comes, the rate will still stay at a safe level and below 50 percent.

After the maiden international bond in 2005, experts said we could completely mobilise in domestic market instead of overseas market. How is your opinion?

Home market is potential and abundant capital sources but the interest isn’t attractive. However, capital requirements in exchange are urgent and large this time. So we need to issue on international markets.

After this issue on international market, will the Government or enterprises do?

As I said, the trend still encourages enterprises in issuing, but they have to prepare to meet the demand for issuing and borrowing and that’s what the Government wants.

The Government bond issues creates conditions for enterprises approach capital sources when their capital requirements are urgent, and if enterprises aren’t ready, the Government will help them with selling the government bond and re-lending.

Source: VNECONOMY