The government is pushing ahead with the offering after a delay of two years amid signs of improving markets.

“We are aiming at US$1 billion for the sale, however, it will be decided based on specific projects,” Hung said in an interview on Wednesday in Hanoi.

The government is raising funds to build roads and power plants as Vietnam’s population is set to expand 40 percent to 120 million by 2050. Annual economic growth may quicken to as much as 8 percent from 2011, Hung said.

“It’s a good time for an issuer like Vietnam to come to the market,” said Pierre Naim, owner of Nassau, Bahamas-based Rainbow Advisory Services, a hedge fund that oversees about $80 million, mostly in emerging-market bonds. “Vietnam is not necessarily seen as one of Asia’s top-quality issuers, but people are looking for yield.”

Vietnam in October 2005 raised $750 million by selling 10-year bonds, then lent the proceeds to Vietnam Shipbuilding Industry Corp., known as Vinashin.

Hung declined to say if funds from the latest sale would be loaned to Electricity of Vietnam, the national power utility, or Vietnam Oil & Gas Group, known as PetroVietnam. Electricity of Vietnam said in June it bought power from China to meet demand.

Dollar shortage

The funds raised from Vietnam’s second bond may help ease a shortage of dollars in the country, Hung said.

“This bond sale will help our local currency to some extent, since the proceeds will be in the US dollar and part of it will be converted into dong to spend domestically, so it will increase supply of foreign exchange,” Hung said.

Vietnam’s foreign-exchange reserves fell to about $16.5 billion as of August, from $23 billion at the end of 2008, because of moves by Vietnam’s central bank to try to stabilize the currency, the World Bank said in a semi-annual report this month.

The dong has weakened 2.2 percent this year, and reached a record low of 17,877 against the dollar as of 9:15 a.m. Thursday in Hanoi.

The bond sale will also “develop a new channel to raise funds for companies as the government will set an example for businesses to go abroad for corporate bond issuance,” said Hung, who has been deputy premier since June 2006.

PetroVietnam said in June it may sell at least $1 billion of bonds abroad next year. Vinashin is also planning an overseas bond sale of as much as $400 million to build ships and ports.

Source: Bloomberg