* Loans: the Vietnamese lender obtains results in syndication with the first largest bank loan

SINGAPORE, April 29 (LPC) – Vietnam’s Techcombank has impressed with its debut in the offshore lending market, raising $ 500 million from two dozen lenders and demonstrating the strength of demand for new credit as politics relaxed monetary policy fuels liquidity in the banking market.

The three-year loan, which is the largest for a Vietnamese first-time bank borrower, received a meteoric response with 19 banks joining the top five arrangers, underwriters and bookkeepers mandated in general syndication.

Lenders have been drawn to its scarcity value and price, despite the risky environment caused by the coronavirus pandemic.

When Techcombank’s loan launched in mid-February, there was little interest in the market.

“There was limited transaction flow caused by the pandemic and (lenders had) excessive liquidity,” said a Taiwan-based credit banker.

The result is all the more remarkable as other financial institutions have struggled to raise loans due to the fallout from Covid-19.

In early April, Macquarie Group closed a first five-year Ninja Loan of a reduced amount of US $ 300 million and a price softened by 120 bps to Libor, after initially targeting US $ 400 million with a margin of 100 bp.

The State Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) closed a one-year refinancing of US $ 120 million in mid-January with only two banks joining a limited syndication. The lackluster response came even before market conditions deteriorated as the pandemic began to spread across Asia.

As the first borrower, Techcombank, formerly known as Vietnam Technological and Commercial Joint Stock Bank, offered a price premium over its peers. In contrast, spreads narrowed for Vietnam’s regular bank borrowers as lenders became more familiar with these credits.

“Most (bank borrowers) are billed at a price of a few hundred, which might be a bit too low for some retail banks, while Techcombank would still be above the cost of funds for lenders by the time they went. engaged, ”said a Singaporean. -based syndication banker.

Techcombank’s loan offered a high level aggregate pricing of 163bp based on an interest margin of 150bp to Libor.

That price was attractive when it launched, but in today’s market it would likely be higher as lenders face higher funding costs due to increased market volatility, the Singapore-based banker said.

By comparison, well-established borrower BIDV finalized its one-year loan in January with a 75bp margin on Libor.

In November 2018, BIDV entered into a US $ 300 million double tranche loan that paid an all-in of 130bp based on a 110bp margin for the three-year portion. In August of the same year, he closed a three-year US $ 150 million in fine loan that paid a high-level all-in of 137bp based on a 117bp margin against Libor. .

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The lenders wanted to support Techcombank, which is one of Vietnam’s largest private banks and rated Ba3 / BB− (Moody’s / S & P). Its total assets increased by 19.5% to reach 383.7 billion dinars (16.3 billion US dollars) in 2019.

The Vietnamese syndicated loan market was one of the few to experience significant growth in 2019, with lenders seeking to diversify away from the larger Indian and Indonesian markets. Syndicated loans for Vietnamese borrowers doubled from 2018 to $ 7.71 billion, according to data from Refinitiv LPC.

“Vietnamese loans are priced much higher than similarly rated Indian or Indonesian loans,” said another Taiwan-based credit banker.

“Usually, banks are subject to tighter supervision than non-bank financial corporations, and they are much safer as we move towards a more conservative strategy. “

The bank’s shareholders include private equity firm Warburg Pincus and Vietnamese conglomerate Masan Group, which made the deal more attractive.

Vietnam is also one of the countries least affected by coronavirus outbreaks in Asia, with just 270 confirmed cases and no deaths as of the middle of last week.

While several banks and non-bank lenders in Asia have exploited the lending markets this year, only Bank Negara Indonesia achieved a similar result to Techcombank. The Indonesian state-owned bank concluded a double-tranche loan of US $ 970 million in early February with 28 banks, 23 of which participated in the general syndication.

The operation was launched in mid-November as a US $ 750 million double-tranche loan offering high-level aggregate pricing of 93 bps and 106.6 bps based on margins of 75 bps and 90 bps. bps against Libor for the 3.5 and 5 year tranches, respectively.