Under the proposal, the Vietnamese private bank intends to offer $1 billion worth of bonds in the form of 3-5 year Euro Medium Term Notes to investors outside the U.S. and Canada, which will be listed on the Singapore Exchange (SGX).
The par value of bonds will be $1,000, multiples of $1,000, or other allowed values in accordance with international bond market practices and the regulations of SGX.
According to VPBank, the nominal interest rate of these bonds can be fixed, floating, or a combination of both depending on each issue and market conditions at the time.
Additionally, the lender said it will issue $120 million in the form of Green Bonds, which are those specifically earmarked to be used for climate change and environmental projects.
These will be directly sold and privately issued to certain investors.
VPBank did not elaborate on the types of projects it will fund with these bonds, which will have fixed terms of three years and interest rates agreed with the buyer.
In early May, VPBank was one of the many banks auctioning expensive luxury cars and high value properties put up as collateral in order to recover capital as it prepares to buy all of the bad debt it sold to the state-owned Vietnam Asset Management Corp (VAMC) in 2013.
The bank still has VND3.16 trillion ($137 million) worth of bad debt in VAMC, who had scooped the amount from the bank’s books in 2013 to prevent liquidity ratios from falling too low.
Because the bank will have to set aside part of its profits for bad debt provisions, it is trying to resolve as much of its overdue debts as soon as possible by liquidating assets put up as collateral.
In 2018, VPBank earned total revenues of over VND31 trillion ($1.33 billion), up 25 percent compared to 2017, as well as a record high pre-tax profit of nearly VND9.2 trillion ($394 million).
Vietnamese banks are persisting with the issue of bonds to comply with credit safety regulations and meet rising credit demand.
TPBank recently stated that it wants to issue $200 million in international bonds.
The State Bank of Vietnam in May approved VietinBank’s plan to issue VND10 trillion ($428 million) worth of bonds. VietinBank will decide the interest rate on them. The bank successfully raised VND450 billion ($19.2 million) last year and VND2.44 trillion ($103.8 million) in 2017 through bonds.
The Asian Commercial Bank (ACB) recently approved a plan to issue 2-year and 3-year bonds worth VND5.5 trillion ($235.3 million), with a maximum interest rate of 6.75 percent. It said it aimed to increase its working capital to meet rising demand for credit.
HDBank earlier had become the first bank in the country this year to successfully raise VND2.5 trillion ($107 million) from bonds.
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