Vietnam's top commercial banks are considering their first US dollar offerings since 2012 at a time when the country's sovereign bonds have soared to record levels. In recent weeks, debt bankers have been spending more time in Vietnam, while at least four Vietnamese lenders have had their credit ratings affirmed or received their first global credit score.
A Singapore-based banker said he had received reverse enquiries from global US-based emerging-market funds on government-linked Vietnamese banks, a sign that investors are ready to go down the credit curve for higher yields.
"We are in discussions with Vietnamese banks, and they like the idea given that the market has rallied, including the sovereign," said the banker. "We're speaking to the top lenders."
A prospective issue from a major Vietnamese bank is likely to attract widespread investor interest at a time when record-low yields across the developed world are pushing many global funds into emerging markets.
Those fund flows have driven Asian sovereign yields to record lows. Vietnam's $1 billion 4.8 percent November 2024, the sovereign's most recent offshore bond, was last week trading at a yield of 3.57 percent, the lowest since it was issued nearly two years ago. Its $1 billion 6.75 percent January 2020 was also trading at a record 2.88 percent, according to Thomson Reuters data.
Bankers and investors have said B1/BB-/B+ rated Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) is a possible candidate, given that it has US $250m of bonds maturing in May 2017 and may consider refinancing the notes offshore. S&P affirmed its rating on August 11.
JSC Bank for Foreign Trade of Vietnam (Vietcombank) received a first-time issuer rating of B1 from Moody's in July.
Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is in talks with banks for a potential US dollar issue, but a banker close to the issuer has said a mandate from last year for an offshore debt issue has expired due to a lengthy approval process. S&P affirmed BIDV's respective B+ and B long-term and short-term issuer credit ratings this month.
Vietinbank and BIDV are among the country's largest lenders, alongside Vietcombank, the biggest in terms of market value.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank), one of the biggest privately owned lenders, also had its BB- S&P rating affirmed in August.
"We certainly think we should see some deals in the short term," said Moody's analyst Eugene Tarzimanov. "We expect US dollar issuance to pick up because we think the banks will want to continue their growth story."
Vietnam, meanwhile, met investors through a non-deal roadshow in March via BNP Paribas, Credit Suisse, Deutsche Bank, HSBC and Standard Chartered. A roadshow was in the works but was subsequently cancelled, one source said.
Expectations that these lenders could raise US dollar debt for the first time since Vietinbank's foray to the international markets in May 2012 come as these banks face increasing demand for US dollars from local exporters and businesses. GDP growth hit 6.7 percent last year, the fastest since 2007.
Bank credit has been rising even faster, with loan books at Vietnamese banks up 25% in 2015, according to Moody's.
"Senior unsecured bonds are an attractive means of funding because they are less restrictive than the bilateral sources they've been using for special lending programmes, and could provide potentially higher margins even though the cost of funding is not necessarily cheaper," said Tarzimanov.
Non-performing loans, which had plagued the banking system for years, dropped dramatically. The NPL ratio fell to 2.58 percent in June from 2.78 percent in May, according the State Bank of Vietnam, a far cry from 17.2 percent as recently as 2012.
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