Vietnam prices $1B 10-year bond at 98.576 to yield 6.95%

The yield represents a premium of 332.7 basis points above comparable U.S. Treasury bonds.

Managers of the deal--Barclays Capital, Citigroup and Deutsche Bank--received $2.4 billion in orders from 200 accounts, according to people close to the transaction. About 56% of the buyers were based in the U.S., 28% came from Asia and 16% were from Europe.

This is only Vietnam’s second global issue after its $750 million bond in October 2005, which carried a yield of 7.125%. The new bonds are rated Ba3 by Moody’s Investors Service and BB by Standard & Poor’s Ratings Services.

The deal comes on the heels of volatile trading across markets last week as uncertainties over the global recovery prompted heavy selling of riskier assets.

The Vietnam deal priced at a higher yield than similar offerings this month from neighboring Philippines and Indonesia, which had paid yields of 5.674% and 6.000%, respectively.

Vietnam is dangling the higher yield to entice investors who may be wary of the country’s gaping current-account and fiscal deficits, rising inflation and threats of downgrades from ratings firms. Demand has also been less impressive this year relative to 2009.

The government is raising the money to provide funds to state-run Vietnam Oil and Gas Group, or PetroVietnam; Vietnam National Shipping Lines; Song Da Corp.; and Lilama Corp. for their refinery, ship purchasing and power plant projects, the central bank said last week.

Terms were as follows:

 
   Amount:         $1 Billion
   Maturity:       Jan. 29, 2020
   Coupon:         6.75%
   Price:          98.576
   Yield:          6.95%
   Spread:         332.7 basis points over Treasurys
   Ratings:        Ba3 (Moody’s Investors Service)
                   BB  (Standard & Poor’s)