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Banking & Finance

REE issues fixed-rate bonds

Released at: 15:26, 29/01/2019

REE issues fixed-rate bonds

Photo: REE Corp.

$100-million inaugural fixed-rate bonds guaranteed by CGIF and placed through Standard Chartered Bank Vietnam.

by Hong Nhung

Standard Chartered Bank Vietnam (SCB Vietnam) announced on January 29 it has successfully placed the Refrigeration Electrical Engineering Corporation (REE)’s inaugural $100-million (VND2.318 trillion) fixed-rate bonds. The issue was guaranteed by the Credit Guarantee and Investment Facility (CGIF), a trust fund of the Asian Development Bank rated AA internationally by S&P.

The fixed-rate bonds bear an interest rate of 7 per cent per annum with a ten-year maturity.

REE is a listed and diverse business group in Vietnam primarily operating in the fields of real estate development and management; mechanical and electrical engineering services; the manufacture, assembly, and sale of Reetech air conditioning systems; and power and water utility infrastructure. The company was one of the first to list on the Ho Chi Minh Stock Exchange and is among the 30 largest companies in terms of market cap.

SCB Vietnam’s expertise and capabilities to execute and distribute the deal enabled REE to achieve long-term fixed-rate funding at a competitive yield. Despite market volatility, bidding interest, especially in the longer tranche, remains strong. In view of the favorable pricing, the issuance strategy was adjusted by shifting the seven-year demand into the ten-year tranche.

This is the sixth time SCB Vietnam has acted as the bond issuance agent for a guaranteed VND-denominated corporate bond issue in Vietnam, reaffirming the bank as the bond issuance agent of choice when it comes to guaranteed local currency bond origination in the country.

“We are delighted to have CGIF onboard with us on our first bond issuance as we tap into the capital markets for fixed-rate long-term funding,” said Mr. Nguyen Ngoc Thai Binh, CFO of REE. “We see it as an important milestone as we continue to widen our funding options and sources in line with our business development and expansion needs.”

“We are pleased to support REE in this landmark transaction, which is a meaningful achievement for us as we celebrate our 115th anniversary of driving commerce and prosperity and serving our clients in Vietnam,” said Mr. Nirukt Sapru, CEO Vietnam and ASEAN & South Asia Cluster Markets at Standard Chartered Bank.

“The successful issue has contributed to deepening and developing Vietnam’s local capital markets, as it encourages more corporate issuers to consider the country’s bond market as a viable financing option.”

“CGIF is delighted to guarantee REE’s first fixed rate ten-year bullet bonds targeting institutional investors,” said Mr. Kiyoshi Nishimura, CEO of CGIF. “While REE’s previous bonds were placed with banks in traditional bank terms, such as floating rates and amortizing repayments, this ten-year guaranteed bond enables REE to tap into institutional investors’ funds with more suitable funding terms to the company.”

The rapid development of the VND corporate bond market since CGIF’s inaugural guarantee for VND bonds in 2014 is extremely encouraging. This transaction marks the eighth such bond CGIF has guaranteed in the VND corporate bond market totaling $532 million equivalent, and solidifies its role as a catalyst for strong bond market development in the country.

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