Vietnam to guarantee $626 mln bonds to help tackle Vinashin foreign debt
Vietnam will offer $626 million of government-guaranteed bonds at the Singapore Stock Exchange from Friday to help state shipbuilder Vinashin repay its foreign creditors.
The bonds will be offered by the Finance Ministry-run Debt and Asset Trading Corporation (DATC) and be for 12-year terms, DATC said in a statement.
The move is one of the biggest steps by Vietnam towards delivering on its "masterplan" of reforms to a once thriving economy suffocated by high levels of toxic loans, blamed largely on cash-sapping state-owned enterprises (SOEs) like unlisted Vinashin, which ran up $4 billion in debt.
Like the many SOEs that were built in the mould of South Korea's world-beating "Chaebol," Vinashin - Vietnam Shipbuilding Industry Group - had easy access to credit, large sums of which were squandered on non-core investments like property, or siphoned off by corrupt officials.
Nine Vinashin executives were jailed last year for mismanaging state resources and the firm almost failed in 2010.
The central bank has put the ratio of non-performing loans in Vietnam's banking system at 6 percent or $7.8 billion, of outstanding loans of $130 billion. Independent economists say the real NPL figure is more likely to be three times higher.
About $64 billion, or half of Vietnam's outstanding loans, were taken out by the 100 biggest of its SOEs, while tightened lending by the troubled banks has led to a real estate market freeze and closure of tens of thousands of smaller firms.
The government has vowed rigorous restructuring of the SOEs, including whittling them down from the nearly 6,000 registered a year ago. SOEs account for about a third of the economy.
"The government still considers shipbuilding as one of the main industries in Vietnam, so the government guarantee of this loan is normal," Pham Thanh Quang, DATC's general director, told a news conference late on Thursday.
DATC would additionally soon issue 14 trillion dong ($663 million) of bonds to local banks to cover Vinashin's domestic debts, on top of 11 trillion dong in bonds issued to lenders last month, Quang said.
The foreign loan had been registered on the New York Stock Exchange and would be issued on the Singapore bourse on Friday, as global fund certificates guaranteed by Vietnam's communist government, DATC said.
Vinashin's chairman, Nguyen Ngoc Su, said the firm was far from finished: "It will affect strongly the restructuring of other loans, quicken the reform process of the group ... create good momentum for the group's development in the future."