Standard Chartered Vietnam Places REE Inaugural VND2.318 Trillion Fixed Rate Bonds

Standard Chartered Bank (Vietnam) Limited (“SCB Vietnam”) has today successfully placed Refrigeration Electrical Engineering Corporation’s (“REE”) inaugural VND2.318 trillion (equivalent to USD100 million) fixed rate bonds. The issue was guaranteed by Credit Guarantee and Investment Facility (“CGIF”), a trust fund of Asian Development Bank rated AA internationally by S&P.

REE is a listed and diversified business group in Vietnam primarily operating in the fields of real estate development and management; mechanical and electrical engineering services; manufacturing, assembling and sales of Reetech air-conditioner systems, as well as power and water utility infrastructures. The company is one of the first to list on Ho Chi Minh City Stock Exchange and among the 30 largest companies in terms of market capitalisation on the exchange.

SCB Vietnam’s expertise and capabilities to execute and distribute the deal has enabled REE to achieve long-term fixed rate funding at a competitive yield. Despite market volatility, bidding interest especially in the longer tranche remains strong. In view of the favorable pricing, the issuance strategy was adjusted by shifting the 7-year demand into the 10-year tranche.

This is the sixth time that SCB Vietnam has acted as the Bond Issuance Agent for a guaranteed VND-denominated corporate bond issue in Vietnam, reaffirming the Bank as the bond issuance agent of choice when it comes to guaranteed local currency bond origination in the country.

“We are pleased to support REE in this landmark transaction, which is a meaningful achievement for us as we celebrate our 115th year anniversary of driving commerce and prosperity and serving our clients in Vietnam. The successful issue has contributed to deepening and developing Vietnam’s local capital markets, as it encourages more corporate issuers to consider the country’s bond market as a viable financing option. Standard Chartered is committed to leveraging our local insights and international network and expertise to support our clients as they seek sustainable growth opportunities,” said Mr. Nirukt Sapru, CEO Vietnam and ASEAN & South Asia Cluster Markets, Standard Chartered Bank.

“We are delighted to have CGIF onboard with us on our first bond issuance as we tap the capital markets for fixed-rate long-term funding. We see it as an important milestone as we continue to widen our funding options and sources in line with our business development and expansion needs,” said Mr Nguyen Ngoc Thai Binh, Chief Financial Officer of REE

"CGIF is delighted to guarantee REE’s first fixed rate 10-year bullet bonds targeting institutional investors. While REE’s previous bonds were placed with banks in traditional bank terms such as floating rates and amortising repayments, this 10-year guaranteed bond enables REE to tap institutional investors’ funds with more suitable funding terms to the company. By bringing new and credible issuers like REE to the Vietnamese Dong bond market, we hope to encourage more institutional investors to provide long-term funding to firms who require such funding. Moreover, it signifies CGIF’s commitment to promote longer term corporate bonds to the Vietnam market which has been largely dominated by Government and Financial Institutions," said Mr Kiyoshi Nishimura, Chief Executive Officer of CGIF.

With active issuances of guarantees in the local currency bond markets in the region, CGIF has realised a key aspiration of its stakeholders - to help companies raise long-term fixed-rate funding in matching currencies. CGIF believes in the importance of deepening the VND capital markets and its vital role in helping the country build a more resilient financial market. The rapid development of the VND corporate bond market since CGIF’s inaugural guarantee for VND bonds in 2014 is extremely encouraging. This transaction marks the eighth such bonds CGIF has guaranteed in the VND corporate bond market totaling USD 532 million equivalent, and solidifies its role as a catalyst for strong bond market development in the country.

The VND2.318 trillion fixed rate bonds are priced at an interest rate of 7.00% p.a. for a 10-year maturity term.

DIEP NGUYEN