HCMC – The HCMC People’s Council on November 10 approved the city government’s proposal to issue municipal bonds worth VND2 trillion (US$85.9 million) to raise capital for key projects in the city.
HCMC Vice Chairman Le Thanh Liem said the city’s spending on development projects this year was estimated at over VND36.1 trillion. Due to the impact of Covid-19, the city’s budget revenue may reach only 85% of the target, the local media reported.
Therefore, the bond issuance is necessary to contribute to eliminating difficulties in production and business, boosting the disbursement of public investment and ensuring social order, Liem added.
The bonds will be issued at a face value of VND100,000 each, with 15-year issue worth VND500 billion, 20-year bonds worth VND500 billion and 30-year bonds of VND1,000 billion.
As for the planned interest rates, bonds with a tenor of 15, 20 and 30 years will have an annual interest rate of 3.47%, 3.82% and 4.05%, respectively. The principal and interest payment sources will come from the city’s budget.
Liem said HCMC had earlier issued bonds in the 2003-2007 and 2012-2018 periods and have gained the confidence of investors.
In the two latest issuances in 2017-2018, municipal bonds were attractive to not only commercial banks but also insurance companies, which preferred bonds with tenors of 20 and 30 years.
Pham Thi Hong Ha, director of the city’s Department of Finance, said the municipal government would ask the Ministry of Finance for its approval over the bond issuance. If approved, the bonds will be issued at the end of December.