Vietnam to double planned bond sales this year as debt matures

Hanoi: Vietnam will almost double the amount of its planned bond sales this year to raise funds to meet spending requirements as about half of its existing debt matures.

The Ministry of Finance intends to sell 100 trillion dong (Dh19.9 billion) of debt, up from 56 trillion dong originally planned, according to a faxed statement from the ministry today. About 70 trillion dong of government debt will mature this year, according to Pham Ngoc Dinh, director of the State Treasury's capital mobilization department.

"We really hope we can sell more debt this year as the market seems to have improved," Deputy Finance Minister Nguyen Cong Nghiep said in a telephone interview today from Hanoi.

An increase in supply may drive up dong-denominated bond yields, which are rising on concern that inflation will quicken, according to a report from the Bank for Investment and Development of Vietnam, the country's second-biggest lender.

The Vietnamese government sold less than a third of the 100 trillion dong of bonds it planned in 2009, "because of last year's market situation in which many investors were having financial difficulties," Nghiep said.

"The pressure for the government to issue bonds this year has become bigger after the amount of debt sold in 2009 was far less than what it planned," said Do Ngoc Quynh, a director at Hanoi-based BIDV. "The government will probably have to raise bond coupons in order to meet its capital-raising target."

The Southeast Asian nation has 147 trillion dong of bonds outstanding.