Vietnam to sell rare $1 bln sovereign bond, first since 2010

(Adds details)

By Ho Binh Minh

HANOI, Oct 30 (Reuters) - Vietnam plans to raise $1 billion from its first global sovereign bond in more than four years, and has hired three foreign banks to help tap international investors.

Meetings are scheduled with potential investors in Singapore, Hong Kong, London and three cities in the United States, the official Thanh Nien (Young People) newspaper said.

Vietnam's Finance Ministry has hired Deutsche Bank (Xetra: 514000 - news) , HSBC and Standard Chartered Bank for the global bond investor roadshows, it said in a statement issued earlier this month without giving the size of the issue.

Officials at the ministry could not immediately be reached for comment.

The Vietnamese government has approved a plan to sell a new sovereign bond to swap for debt issued in 2005 and 2010.

The Southeast Asian country requires intensive funding to accommodate economic growth, slated to accelerate to 5.8 percent this year and 6.2 percent in 2015.

The country is rated B1 by Moody's and BB- by Standard & Poor's, and both ratings have a stable outlook.

Investor (Other OTC: IVSBF - news) meetings began on Wednesday. A 144A/Reg S format bond issue could follow.

"Vietnam is quite a rare issuer so I think there will be interest because of the scarcity value. The economy has stabilised significantly in many aspects, said Rajeev De Mello, a Schroders (LSE: SDR.L - news) fund manager based in Singapore.

"There is appetite for spreads and the yield hunt is still on, so a 10-year bond will not put investors off. Beyond that it will depend on the insurance companies and pension funds - it will be related to a specific type of demand. The 5-10 year part of the curve is easier for them to price. But they may be tempted to longer maturity to lock in very low yields."

In 2010, the government picked Barclays Capital, Citigroup and Deutsche Bank as joint lead managers for the issuance of a $1 billion 10-year sovereign bond. In 2005, Vietnam sold $750 million worth of sovereign bonds maturing in 2016.

The debt due in 2020 is now yielding around 4 percent, compared with the bonds due in 2016, which yield around 2 percent.

Vietnam's public debt has been rising, with 98 percent being used for development, Finance Minister Dinh Tien Dung was quoted in a government statement as saying on Wednesday.

Public debt would rise to 60.3 percent of Vietnam's gross domestic product (GDP) by the end of 2014, from 54.2 percent last year, according to a government report delivered by Prime Minister Nguyen Tan Dung to the National Assembly on Oct. 20.

Foreign debt is forecast to rise to 39.9 percent of GDP by the end of 2014, up from 37.3 percent last year, and would peak at 64.9 percent in 2016 before decreasing to 60.2 percent in 2020, based on government reports. (Additional reporting by Umesh Desai in HONG KONG; Editing by Kim Coghill)