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| First private firm likely to launch $700m international bond |
| 16-MAR-2010 Intellasia | The Saigon Times Daily |
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| 16 Mar, 2010 - 7:00:00 AM |
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HCM City-based Phu My Bridge BOT Corporation will become the country's first private firm to launch an international bond issue to raise $700 million for three major communications projects if government approval is forthcoming.
The general director of the corporation, Nguyen Thanh Thai, told the Daily yesterday that he had worked with the Ministry of Finance over this unprecedented finance raising plan before the HCM City government formally passed a proposal to the ministry on March 1.
The ministry is supposed to forward the proposal to the government for approval. "The final decision rests with the government, Thai said.
"I hope the government will decide on this matter next week. Asked about foreign exchange risk, Thai said, "Of course, we have assessed all possible risks associated with this large international bond issue, but we really want to mobilise enough capital from other countries so we can build more high-quality infrastructure for the country:'
In the document sent to the Ministry of Finance and obtained yesterday by the Daily, HCM City vice chair Nguyen Thanh Tai said Phu My Bridge BOT wrote to the city government on August 5 last year suggesting the sale of the debt paper.
The issue would be guaranteed by the central government and advised by global investment banking and securities firm Goldman Sachs, according to the document.
The rationale for the city government to let the proposal go before the central government despite this being the first international bond sale by a local private company is the city's lack of funds for huge infrastructure projects.
"There's no precedent for a non-state enterprise's international sale of bonds in HCM City;' city vice chair Tai said in the document.
"However, given the city's over-stretched finances, it is appropriate to engage a company in the mobilisation of funds from other sources than the State budget for developing the city's communications systems.
Issuing bonds on international markets is also a viable channel:' Tai said the central government could provide guarantees for Phu My Bridge BOT pursuant to the Law on Public Debt Management passed on June 17, 2009 by the National Assembly and enforced from early this year.
He requested the Ministry of Finance to provide guidelines for the corporation to complete procedures for the proposed bond issue. The Daily reached deputy minister of Finance Tran Xuan Ha yesterday afternoon but he declined to comment on the matter.
The city's document says the company would use the proceeds from the debt paper issue to fund a new bridge running in parallel with the overloaded Saigon Bridge in the city, the city's first tramway and a bridge connecting the city and neighbouring Dong Nai Province.
The city government has agreed to award the Saigon 2 Bridge project worth $136 million to Phu My Bridge BOT Corp. to build the structure under the build-operate-transfer (BOT) format, says the document.
As for the $246- million Tramway No.1 project, the city has given the green light to a consortium comprising Thanh Danh Trading and Construction Co. Ltd - the parent firm of Phu My Bridge BOT Corp, and Malaysia's Titanium Management. The tramway, also in the BOT model, will connect Mien Tay Coach Station in the city's west, Cho Lon area in District 5 and the city's downtown area.
The central government assigned Dong Nai Province to coordinate with HCM City to develop the Nhon Trach Bridge project capitalised at $380 million, according to the document.
Vice chair Tai said in the city's document that Phu My Bridge BOT Corp. had informed the government's decision to let the corporation develop this bridge project.
The combined cost of the three projects is $762 million. This means Phu My Bridge BOT Corporation will use its equity totalling $62 million to finance the balance.
Phu My Bridge BOT Corp. stole the limelight in September last year when it completed the BOT construction of the cable-stayed Phu My Bridge, the first of its kind in the city, which crosses the Saigon River to link districts 2 and 7.
The company has got approval from the city government to start toll collections from vehicles crossing the bridge valued at over two trillion dong.
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