Ho Chi Minh City:Experts recently convened to discuss strategies for Ho Chi Minh City to tap into international markets for long-term capital through bond issuance. The consultation, held at the Vietnam International Financial Centre in Ho Chi Minh City (VIFC-HCMC), focused on the city's plans to issue municipal and project bonds.
According to Vietnam News Agency, the VIFC-HCMC organized this consultation in collaboration with the International Finance Corporation (IFC) as part of efforts to draft a resolution by the Ho Chi Minh City People's Council. This resolution aims to facilitate the issuance of bonds to address the city's infrastructure investment needs, estimated to exceed 3.17 quadrillion VND (122.01 billion USD) from 2026 to 2030. The current city budget is projected to cover only about 31% of this requirement.
The draft proposal suggests that bonds could become key products of the financial center, offering medium- and long-term funding to support infrastructure projects. This strategy includes developing additional services like advisory, credit rating, and capital arrangement at the VIFC-HCMC.
Assoc. Prof. Dr. Nguyen Huu Huan, Vice Chairman of VIFC-HCMC, highlighted a proposal for multiple bond issuances under a medium-term programme. This approach would involve completing common documentation upfront and tailoring each issuance to current disbursement needs and market conditions. The People's Committee would oversee the specifics of each bond issuance, ensuring they align with the approved framework and council limits.
The proposal also considers using established domestic or international systems for bond registration and trading if the financial center's infrastructure is not ready. These plans await regulatory approval.
IFC's Pavel Kochanov emphasized that Ho Chi Minh City's borrowing capacity would depend on its economic metrics, financial management, and ability to service debt with its resources. He stressed the importance of maintaining a safety margin and ensuring transparency in financial data for investor risk assessment.
Neeraj Gupta from IFC advised prioritizing projects with completed feasibility studies and necessary approvals, especially for international bonds, to avoid financial inefficiencies from undisbursed funds. Tailored financial structures are recommended for different projects, considering specific risks and cash flow profiles.
Finally, advice from A and O Shearman suggests Ho Chi Minh City must complete comprehensive preparations, including legal and advisory work, credit rating, and investor engagement, before entering international markets.