vinacomin-and-cabei-tap-domestic-markets

Vinacomin and Cabei tap domestic markets

Vinacomin of Vietnam successfully prices a debut bond offering, while Cabei issues in Thailand. Both deals are managed by Citi.
VietnamÆs largest mining company, Vinacomin, priced an inaugural Vnd1.5 trillion ($95.2 million) 10-year offering on Friday, attracting a total order book of Vnd1.75 trillion and pricing at a yield of 9.5%, or 40bp over government bonds.

The pricing is reportedly the tightest spread ever achieved by a Vietnamese corporate in its domestic market, despite a substantial increase in bond yields on the back of inflationary pressures.

The majority of the bonds were sold to onshore investors, although 7% were placed offshore. A total of 23% of the bonds sold to corporates, 64% to banks, and 13% to fund/asset managers.

The deal is part of a larger debt financing exercise aimed at funding Vinacomin's power and bauxite projects.

In Thailand, the Central American Bank for Economic Integration (Cabei) succeeded in raising Bt2.34 billion ($77 million) via a 10-year bond which priced with a yield of 5.97%. This is equivalent to a spread of 75bp over government bonds, or 66bp over dollar Libor.

This was Cabei's first offering in Thai baht and the bonds were bought entirely by onshore investors, with local insurance companies taking the bulk of the issue.

"We are seeing a series of non-local Thai issuers tapping the market as part of an initiative by the local authorities in open and broaden the local bond market," says a source. "This is allowing borrowers to raise funds at competitive levels given the turmoil in the international markets, and is an opportunity for them to diversify their investor bases."

Thailand has recently implemented a series of measures in a bid to stimulate its local bond market. Earlier this year, the Ministry of Finance allowed six international financial institutions and government-sponsored banks to issue baht-denominated bonds totalling Bt25.9 billion in Thailand. These were: Cabei, the International Bank for Economic Integration, the International Finance Corporation, the Japan Bank for International Cooperation, the German development bank (KfW), and the Nordic Investment Bank.

Thailand has also exempted investors buying baht-denominated bonds, mutual funds and property funds from having to deposit 30% of their total investment in a Thai bank, which would previously have been locked up for 12 months. The move is aimed at encouraging foreign investors to participate in local currency offerings.

Both deals were managed by Citi.
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