GuarantCo provides VND 1,150 billion (circa USD 50 million) guarantee to Ho Chi Minh Infrastructure Investment JSC
10-year tenor local currency bond to construct an expressway in the Mekong Delta
GuarantCo has provided a VND 1,150 billion (circa USD 50 million) guarantee to Ho Chi Minh Infrastructure Investments JSC (CII) to support the issuance of CII’s first 10-year bond. CII was set up by the Ho Chi Minh City (HCMC) government in 2001 to attract private sector investment into infrastructure development. The proceeds of the bond will be put towards the construction of an expressway project in the Mekong Delta.
GuarantCo, a Private Infrastructure Development Group (PIDG) company, played an active role in shaping the transaction, leading to the issuance of the bond, and attracting long-term domestic institutional investors as the target investors. GuarantCo’s additionality in extending the guarantee has enabled CII to issue its first 10-year bond.
The toll road is intended to ease the significant traffic congestion currently faced by commuters and truck drivers travelling between HCMC and the Mekong Delta. Both areas are key economic corridors, with activities including agriculture, fisheries, garment manufacturing and tourism. The four-lane expressway is expected to improve the safety of users, as the current national motorway cuts through the towns, where heavy transport vehicles travel the route along with motorbikes.
The expressway will provide employment for around 4,000 people and will promote safe travel thereby reducing the number of accidents. Approximately 4 million people will benefit from the new expressway during the initial years of operations.
The Government of Vietnam recognises the need for private sector involvement to support its national development plans to include improvement of road networks including the new expressway. As part of the government’s national development strategy, improved connectivity will act as a catalyst for further economic development.
Lasitha Perera, CEO of GuarantCo, said: “We are delighted to have supported the first 10-year fixed rate bond of Ho Chi Minh City Infrastructure Investment, which we fully guaranteed. We anticipate that this transaction will establish new precedents for local capital markets in Vietnam, which will benefit other companies seeking to access longer-term funding.”
Le Quoc Binh, CEO of Ho Chi Minh City Infrastructure, said: “It is an important milestone for CII as we have successfully closed the VND 1,150 billion bond issuance guaranteed by GuarantCo. I would like to express my most sincere appreciation for the hard work and diligent effort that GuarantCo, TCBS, and CII have all dedicated over the past year. I hope this cooperation with GuarantCo will pave the way for us to take on much larger transactions in the future, thereby, bringing sustainable values not only for the company but also for the development of the society.”
Nguyen Thi Thu Hien, CEO of TCBS, the bond agent for the transaction, said: “We are proud to be the bridge between the issuer, guarantor and investors. Our efforts have efficiently delivered this deal on schedule with consideration to the market and timing factors. This achievement reflects our experience and knowledge of the landscape and market appetite, while demonstrating our deep understanding of the issuer and commitment to seeing the deal’s closure. We believe this will help in developing the infrastructure of the Mekong Delta which is vital to Vietnam’s economic growth.”
This is the second transaction that GuarantCo has closed in Vietnam. In June 2018, the company guaranteed a VND 660 billion corporate bond with Nam Long Investment Corporation, an affordable housing developer.
GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through PIDG, and the Netherlands, through FMO. GuarantCo is rated AA- by Fitch and A1 by Moody’s. www.guarantco.com
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 170 infrastructure projects to financial close and provided 231 million people with access to new or improved infrastructure. PIDG is funded by six governments (UK, Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org
About Ho Chi Minh Infrastructure Investment
Chi Minh City Infrastructure Investment JSC (CII) was founded by the end of 2001 as an instrument for the Ho Chi Minh City People’s Committee to fundraise from private sources to invest in infrastructure developments. The company originally had three founding shareholders: the Ho Chi Minh City Investment Fund for Urban Development (HFIU) – now known as the Ho Chi Minh City State Financial Investment Company (HFIC), the Ho Chi Minh City Voluntary Youth Production Trading and Services Company (VYC) and the Ho Chi Minh City Investment and Services JSC (INVESCO). www.cii.com.vn