Large banks focus on corporate bonds

HA NOI (VNS)— The total value of corporate bonds sold during the first six months of this year has reached VND15 trillion (US$707.5 million), equivalent to 88 per cent of last year’s total, according to a report from the Bank for Investment and Development of Viet Nam (BIDV).

Property developer VIDP Group issued VND7.6 trillion ($358.4 million) in corporate bonds, mineral giant Vinacomin raised VND2.5 trillion ($117.9 million) and HCM City Infrastructure Investment (CII) issued VND1 trillion ($47.1 million) worth of bonds.

The BIDV report recorded small scale issuance of under VND100 billion ($4.7 million) from other companies. “Most of the bonds belonged to real estate firms,” the report said.

Corporate bonds were favoured by commercial banks. BIDV and Techcombank bought VND500 billion ($23.8 million) and VND3 trillion ($141.5 million) worth of bonds in VIDP Group, while all the bonds issued by CII, totalling VND1 trillion ($47.6 million), were sold to Vietcombank (VCB).

“Attractive yields have brought banks with large cash reserves to corporate bonds,” the report said. “Despite the gloomy economic situation that made it for bond issuance more difficult, large corporations are still alluring to investors.”

The supply of corporate bonds is expected to continue to rise as companies take advantage of low interest rates to raise capital. “Along with increasing supply, demand will be large, especially for bonds from reputable businesses,” the report said.

Bond yields for three to five-year terms range from 13-15 per cent.

Meanwhile, Government bonds were less attractive, according to Viet Dragon Securities Co. Government bonds during the first six months yielded about 6-9 per cent. Declining yields discouraged investors, especially banks.

In June and the beginning of this month, foreign investors sold Government bonds with a net value of VND7.2 trillion ($339.6 million). — VNS

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Myanmar set for stock exchange

Deputy Minister for Finance and Revenue, Maung Maung Thein confirmed on 15 July that Myanmar will begin implementing a stock exchange market this year. (MIZZIMA)

Earlier announcements state the stock exchange market will be established by 2015, but preparations are already under way.

“Earlier we planned to begin in 2015, but it would be too late. So, we are beginning this year,” says Maung Maung Thein.

The Central Bank of Myanmar is cooperating with the Daiwa Research Institute and Japan’s Tokyo Stock Exchange to establish Myanmar’s stock exchange. Later this month, Maung Maung Thein says there will be a demonstration on the operation of the stock exchange with the help of a Myanmar IT company.

According to Maung Maung Thein, the “Security Exchange Law” has been put forward to the Lower House in the current ongoing parliamentary sessions. Shortly after the bill has been approved, the stock exchange will be established.

Maung Maung Thein says a relevant committee has been formed in order to ensure a smooth launch for the stock exchange.

“Myanmar needs a huge market to attract financial investments,” says Maung Maung Thein. “Myanmar did not have that market. To establish that market [stock exchange], we have prepared for many years.”

Hla Maung, an economist, says, “It’ll be surprising if the stock exchange can be established in late this year. The sooner the better. But it is a financial market, so we need to have public companies and corporations that can sell shares. If not, the market will be weak and unsuccessful.”

Public companies that will sell shares in the stock exchange have to submit the company’s real status to the supervising committee. However, experts say this will pose a big challenge to existing Myanmar companies as they deal with problems about tax affairs.

Dr. Aung Thura, chief executive officer at Thura Swiss Company, who provides economic research services for public companies in Myanmar, recently told Mizzima, “According to Daiwa, new emerging companies such as KBZ and AGD will enter into the stock market rather than the current public companies when the stock exchange is established in Myanmar.”

Currently, only two public companies have registered at the Myanmar Security Exchange Center [MSEC]. An international economic researcher told Mizzima that if experts spread knowledge about the stock market among Myanmar citizens beforehand, it is likely that the early stage of the stock market will run smoothly.

The stock exchange will be located near Bandoola Garden, where Myawaddy Bank currently stands. The building formerly owned by the Finance and Revenue Ministry is due to be returned to them later this year.

Vietnam plans to extend stock trading hours to boost liquidity (Bloomberg)

Vietnam’s two main stock exchanges will extend trading hours to help boost liquidity and lure investors to a market that’s 13 times smaller than Singapore’s.

 The Ho Chi Minh City Stock Exchange, the country’s main bourse, will extend afternoon trading hours by 45 minutes to end at 3 p.m. local time, Chairman Tran Dac Sinh said in a telephone interview today. Trading hours for the Hanoi Stock Exchange will also be extended by 45 minutes for the afternoon session, Deputy General Director Nguyen Thi Hoang Lan said by phone.

“Longer trading hours will allow institutional and professional traders to spread out trading more,” said Attila Vajda, a Ho Chi Minh City-based analyst at ACB Securities Co.“It will be slightly easier to beat the market, especially if volumes are sizable.”

The VN Index (VNINDEX) has rallied 27 percent this year, the best performer among benchmark gauges in Southeast Asia, as the country’s central bank cut interest rates last month for an eighth time since the start of 2012 and the government stepped up efforts to tackle banks’ bad loans.

The nation’s stocks are valued at $45.6 billion, compared with $595.8 billion in Singapore, the region’s largest market.

The new trading hours for the Ho Chi Minh City bourse may start in the third quarter, while July 8 is targeted for the Hanoi exchange, according to the exchanges’ officials. There are no changes in trading hours for the morning sessions.

The plan to extend trading hours for the Ho Chi Minh City Stock Exchange was earlier reported by Vietstock, an online financial news service.

About $51 million of securities traded daily on average this year on the Ho Chi Minh City Stock Exchange, the country’s main bourse, compared with $1.34 billion for Singapore, according to data compiled by Bloomberg.

The State Securities Commission has agreed in principle to the trading hours extension, Nguyen Son, head of market development at the regulator, said today. The exchanges have started pilot programs to test the system, he said.

VinGroup sets high business target

HA NOI (VNS)— Property developer VinGroup (VIC) said it was commited to delivering 8,000 apartments in the Royal City and Times City projects in Ha Noi this year despite low demand given the sluggish real estate market.

At the company’s annual meeting of shareholders on Saturday, VinGroup chairman Pham Nhat Vuong said VinGroup would not reduce the prices of their apartments as had other companies, but would keep the old prices to protect the interests of the customers who had purchased their apartments. “There are many ways to raise capital given difficult conditions, so slashing apartment prices when the market is in a downturn can affect other clients’ interests,” Vuong said.

The Times City project has completed the first phase with 12 towers, nine of which have been sold while the other three are still not open for sale. VinGroup also plans to launch its two major shopping malls in Ha Noi this year, Vincom Mega Mall Royal City in July and Vincom Megal Mall City Times in December, while seeking new promising projects in Ha Noi, HCM City, Nha Trang and other localities for investment. “There will be many opportunities for investors with cash in the current context,” Vuong said.

Last year, VIC’s net revenue was over VND7.9 trillion (US$376.2 million), an increase of 242 per cent over the previous year. Its after-tax profit also jumped 72 per cent over 2011, totalling nearly VND1.85 trillion ($88.1 million).

In the financial sector, VinGroup successfully issued international convertible bonds worth $300 million while attracting another $200 million from the global private equity fund Warburg Pincus into Vincom Retail. This year, VIC projects planned to earn a pre-tax profit of around VND10 trillion ($476.2 million) and to have net revenue of VND12.2 trillion ($581 million).

The group has also approved a plan for debuting shares overseas through an initial public offering on an international stock exchange in the future. Two foreigners were elected to VIC’s board of directors during this meeting. They were Joseph Raymond Gagnon, managing director at Warburg Pincus, and Marc Villers Townsend, managing director at CBRE Vietnam, an independent board member. VIC shares rose slightly yesterday, closing at VND70,000 ($3.33) a share. — VNS

Warburg Pincus invests $200m in Vincom (Reuters)

Warburg Pincus LLC, the private-equity owner of Neiman Marcus Group Inc., will lead a consortium to invest as much as $325 million in Vietnam’s Vingroup Joint Stock Co., the firm’s first Southeast Asia deal since 2010.

The group will spend $200 million for about 20 percent of the Hanoi-based company’s Vincom Retail property unit, Vingroup said in a statement. The New York-based firm may invest an additional $100 million, Vietnam’s largest shopping mall owner said.

Warburg Pincus, which raised $11.2 billion in May, joins a wave of private-equity firms betting on the country’s emerging middle class and real estate market recovery. The deal rivals KKR & Co.’s $359 million investment in a unit of Masan Group Corp. in January and will help Vingroup accelerate planned shopping mall developments

“There’s very good chemistry between the two companies,” Le Thi Thu Thuy, Vingroup’s chief executive officer, said in an interview. “We want to leverage Warburg-Pincus’ experience and take Vingroup to the next level. We want to internationalize this company.”

Vingroup plans to offer shares in Singapore this year and Warburg Pincus will invest as much as $25 million as part of today’s agreement, she said. Vingroup also plans an international bond sale, she said, without giving a time frame.

Warburg Pincus will gain positions on Vingroup’s board of directors as part of today’s transaction, according to the statement.

KKR Deal

A fifth of private-equity investors surveyed in a Coller Capital report in December said they are turning to emerging Asian markets including Vietnam and Indonesia as investments in China become risker.

KKR in January more than doubled its stake in Masan Consumer Corp., a Vietnamese fish sauce maker, making it the country’s largest private-equity deal. TPG Capital, the private-equity firm run by David Bonderman and James Coulter, said in March it was looking for its first Vietnam investment in nearly four years.

Warburg Pincus’s only investment in Southeast Asia was in Singapore’s Quest, an engineering services company, in 2010, according to its website.

Warburg Pincus Buys Vincom Retail for US$200 mln

 May 31, 2013 (Vietnamica) — On May 29, Warburg Pincus, the consortium led by U.S. buyouts fund, unveiled its plan to buy 20 percent of Vincom Retail, the retail unit of Vietnam’s Vingroup JSC (HOSE:VIC) for US$200 million (Dan Tri, May 29).

Warburg pledged to invest more US$25 mln in Vingroup’s first initial public offering (IPO) in the international market. In the future,  an additional US$100 million will be poured in Vincom Retail for expansion and retail property-related deals.

Vincom Retail is the country’s largest owner and operator of shopping malls with seven assets valued around $1.1 billion.

On May 28 session, VIC hit ceiling price of $3.6 per share and nearly 850,000 shares were transacted (VietFin, May 29)

Laos will issue bonds in Thai market for first time this week

The Lao government will raise funds through the Thai capital market for the first time by issuing 1.5 billion baht worth of bonds to institutional investors on Thursday. The three-year bonds will carry a coupon rate of 4.5%.

Thailand is the most advanced capital market in the Mekong region and uses this strength to foster development of neighbouring capital markets.

Niwat Kanjanaphoomin, president of the Thai Bond Market Association, believes Laos will be able to attract foreign investors to its government bonds to be issued in the Thai capital market.

Bonds issued by foreigners to raise funds in the Thai capital market are typically required to have a credit rating, but Thailand’s Finance Ministry is making an exception in this case.

“The first lot of Laotian government bonds is small, but it’s good to test the market and build up investor awareness for a potentially larger bond issue in the Thai market or even the Laotian bond market later on,” said Mr Niwat.

Laos has appointed Twin Pine Consulting Co Ltd (TPC), a Thai advisory firm, to assist with the bond issue.

TPC is a regional advisory firm tailored to Southeast Asia, specialising in energy and agriculture.

The company was founded by Chiridacha Phungsunthorn, who has long experience in regional law, and Adisorn Vasukhup Singhsacha, a financial adviser with more than a decade in international banking.

Mr Chiridacha said TPC has other deals with Greater Mekong Subregion governments in the pipeline that could raise funds via the Thai bond and stock markets.

TPC works with LS Horizon Ltd, also founded by Mr Chiridacha and a pioneering regional law firm, when engaging with clients across the Mekong region.

LS Horizon has offices in Thailand, Laos, Myanmar and Singapore, with further expansion planned.

Successful projects done by LS Horizon in the past include advising on EDL-Generation Plc’s listing on the Lao Securities Exchange.

Mr Adisorn said the stock market in Laos opened two years ago and has two listed companies so far. Myanmar is also looking to launch its own stock exchange in 2015, while Cambodia has similar ambitions.

“Thais must first have a more open view towards their neighbours and an eagerness to grow, as we share a similar culture with other countries in Southeast Asia,” he said.

He said potential deals advised by TPC at present include providing advisory services to leading Myanmar companies in raising funds through the capital markets of other Asean countries, a real estate project in the heart of Yangon and a property fund for investment in Thailand.

24 May 2013│Bangkok Post

Mr Chiridacha said investment openings in Laos, Myanmar and Cambodia are promising, but the opportunities in Malaysia and Vietnam are slim due to differences in the legal and business cultures.

Indonesia is more intriguing than Malaysia and Vietnam, with energy and consumption-related businesses especially attractive, he said.