Comment: Vietnam Must Act Now Or The Window Of Opportunity Will Close - The Best Time To Issue Bonds Is When It Is Not Necessary For The Country Concerned.

(From The Banker)

In a world beset by low growth and the haunting spectre of deflation, Vietnam stands out for its forecasted GDP growth of 5.3%, beaten only by China. The government is reaping the rewards of a business-friendly, pro-active policy instituted a couple of years ago, albeit within the limits of its political character.

The next step is a planned international bond issue. However, on a recent trip to Hanoi, The Banker heard strong rumours that sections of the government were questioning the wisdom of accessing the bond markets when Vietnam does not need the funds and, in any case, can get cheaper finance by other means.

This is misguided thinking. The best time to issue bonds is when it is not necessary for the country concerned. It places the issuer in a stronger position vis a vis the markets. It also allows the country to decide what amount it wants to issue without having to consider its short-term financial needs.

In Vietnam's case, it is in a position to issue almost a token amount. The point of the exercise is to establish a benchmark.

Will the top banks or the top corporates want to issue bonds on the back of a country bond tomorrow? Neither tomorrow nor ...