Vietnam Prosperity Joint Stock Commercial Bank (VPBank) is looking to raise US$1bn through an offshore loan that will be the largest such financing for a Vietnamese bank since 2022 after government investigations into a financial fraud turned investors wary of exposure to the country.
The pricing could come inside that of a US$400m three-year bullet social loan VPBank completed in June last year. The latest deal will refinance a US$600m facility with the same tenor that was wrapped up in July 2022.
The private sector Vietnamese lender will compete with other higher-rated and state-owned FI borrowers tapping the Asian loan market. Indonesia’s Bank Mandiri is also seeking a US$1bn three-year loan and Bank of India is looking to borrow up to US$400m. India’s Canara Bank launched a US$200m four-year loan earlier this month, while State Bank of India launched a five-year loan of up to US$1.25bn in November, which is expected to be wrapped up soon.
Although the new borrowing for VPBank is expected to carry tight pricing, it will still be significantly richer than the loans for Bank Mandiri and BoI, while providing lenders with welcome diversification away from tightly priced deals. Both Bank Mandiri and BoI are not as frequent borrowers as VPBank, which has tapped the syndicated loan market every year since 2022.
Bank Mandiri, rated Baa2/BBB/BBB, is offering a top-level all-in pricing of 88.6bp based on an interest margin of 65bp over term SOFR. BoI, rated BBB− (Fitch), is paying top-level all-ins of 100bp and 107bp based on margins of 83bp and 96bp over term SOFR respectively for three and five-year maturities.
VPBank is rated Ba3 (Moody’s). Its 2024 borrowing paid a top-level all-in of 196.6bp based on a margin of 170bp over term, while the 2022 financing offered a top-level all-in of 180bp via a margin of 155bp.
Comeback ambition
The large size on VPBank’s new loan is also eye-catching. Vietnamese banks have closed billion-dollar deals in the recent past but for shorter tenors. State-owned Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) closed a one-year US$1bn financing in November 2021, while private sector Vietnam Technological & Commercial Joint Stock Bank (Techcombank) raised a US$750m three-year tranche in a US$1bn that closed in May 2022.
However, lenders turned wary and deal sizes dropped after the Vietnamese government began investigations into the bond and real estate markets in the second half of 2022, which led to the arrest of real estate conglomerate Van Thinh Phat Holdings Group’s chairwoman Truong My Lan on suspicion of financial fraud in October of that year. The arrest caused a run on Saigon Commercial Bank, which Lan controlled indirectly, and the bank was placed under state control last year. Lan was convicted last April of embezzlement and bribery amounting to US$12.5bn and sentenced to death.
VPBank, however, has received steady interest from investors on each visit to the syndicated loan market. Its loans from 2024 and 2022 attracted 13 and 14 lenders in general syndication respectively, while a US$325m three-year social loan completed in March 2023 drew a dozen.
Another factor playing in VPBank’s favour – at least since 2023 – is Sumitomo Mitsui Banking Corp’s acquisition of a 15% stake in October that year. The Japanese bank has been one of the key leads on all of VPBank’s syndicated loans since 2021.
SMBC is coordinator this time round as well, putting together an arranger group in an ongoing senior phase of syndication.
VPBank also faces little competition from its compatriot borrowers with a couple of exceptions.
One is its own unit, VPBank Securities, which is making its syndication loan market debut with a 364-day financing of up to US$125m that pays a top-level all-in of 260p based on a margin of 205bp over term SOFR.
The other is Saigon Hanoi Commercial Joint Stock Bank, which is tapping a US100m three-year ESG financing that offers a top-level all-in of 212.5bp via a margin of 200bp.
Deal flow from Vietnamese bank borrowers was dismal last year. Besides VPBank, the only other borrower to raise an offshore syndicated loan was Techcombank. It closed a US$200m three-year loan in April with 10 banks joining. The borrowing paid a top-level all-in of 185.02bp via a margin of 170bp over term SOFR.