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  News

$300 million to be raised in bond issuance

The government has tabled a plan to raise nearly $300 million from the sale of bonds to the end of the year - the first phase of an ambitious scheme to collect more than $4 billion from bond sales by 2010. Payment - both on the principal and the interest - is to be made in local or foreign currency, and funds raised by the sale are to support a number of road construction and irrigation projects nationwide.

The plan is to be made jointly by the ministries of Finance, Transport, Agriculture and Rural Development, Planning and Investment, and the State Bank.
"The $300 million we hope to mobilise from the domestic market will be enough to fund the planned projects, and will be spent in an efficient and economical manner," a senior official from the Ministry of Finance (MoF) said last week.
"We have not yet determined the percentage that will be paid in foreign currencies, and we will examine the macroeconomic situation and various indices at a later date in order to do that," the official said.
The MoF is to announce the interest rate for the bonds later this month, estimated by most experts to be between 3 and 4.5 per cent. The official said the rate would be competitive but calculated so as not to undercut the mobilisation efforts of commercial banks.
"From now to 2010, the MoF will issue a number of bonds and calculate the interest rates based on specific circumstances. To keep rates consistent, we will keep them unchanged for the length of any given issuance," the official said.
Foreign exchange raised by the sale will be passed on to the State Bank in exchange for local currency which will then be distributed to various projects.
The State Bank issued Decision 1085 in September on adjustments and amendments to market policies to increase liquidity. This move is expected to make it easier for investors to cash in bonds before or after maturation.
Two forms of bond ownership definition - naming and certification - are to be applied to the upcoming issuances.
Projects to benefit from the proposed sale include the Ho Chi Minh Highway, Northern Border Ring Road, National Highway 6, Kunming-Haiphong Corridor, National Highway 14C, the Cua Dat lake irrigation project, the Ray River irrigation project in Ba Ria-Vung Tau province, the Ban Mong reservoir project in Nghe An province, and the Buk Ha and Thuong lakes projects in Dak Lak province.
The government is expected to issue bonds abroad for the first time this October, but has yet to release any details.

www.vir.com.vn - (01/10/2003)


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