Mar 29, 2012
Vincom was successful in raising capital through convertible bond issues earlier in the week. They sold $185 million USD in 5% coupon/7% yield five year notes payable in US Dollars. Compares very favorably with their first round of debt financing where they raised $100 million USD on 6% coupon bonds with no favorable initial pricing.
It was reported that 40% went to European investors. It was not open to U.S. investors directly. According to their statement on the issue, 25% of the bonds were sold to new investors. Vincom was granted license to sell up to $300 million in bonds and currently has that $65 million available for another round of financing at a later date. Given the current environment for lending, this capital raise by Vincom was very favorable where loans are running in the 8-10% range especially since these can be converted to equity at maturity.
But sentiment is improving. In addition to Vincom, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) is planning to issue a dollar bond this week through Barclays and HSBC.
The Vincom offering, which was arranged by Credit Suisse, was initially launched at a base deal of $150 million plus an upsize option of $100 million. According to a source, the order book was in excess of $200 million, although some of tSTC orders didn't match the terms on offer and in the end the issuer settled for a deal size of $185 million – almost twice the $100 million it raised in 2009. The company is also keeping the remaining $65 million of the upsize option and may still use that over the next 30 days if the price recovers.
This news is very encouraging for the corporate paper market in Vietnam after the problems of VInashin as VietinBank is currently courting investors for a similar issue, though much larger in size. The roadshow started in mid-March for up to $500 million in U.S. Dollar convertible bonds. Credit Suisse handled Vincom's issue, while HSBC is working with VietinBank.