PetroVietnam inks deals with three foreign banks

The banks were France's BNP Paribas, Japan's Sumitomo Mitsui Banking Corporation (SMBC), and Standard Chartered Bank of the UK.

The International Swaps and Derivatives Association (ISDA), a trade organisation for over-the-counter derivatives, has created a standardised contract called the ISDA Master Agreement for the deal.

PetroVietnam said this was the first time the group had signed ISDA master agreements with overseas banks.

BNP Paribas is the first foreign bank to guarantee payment for the Phu My Fertiliser Plant. The deal is worth US$36 million and guarantees payment for the Dung Quat Oil Refinery up to $176 million.

BNP Paribas has also part-financed a fund worth $300 million for the Dung Quat refinery and an export credit valued at $147 million for the Dung Quat Polypropylene Plant. It has also bankrolled the Ca Mau Fertiliser Plant to the tune of about $250 million.

SMBC has sponsored a $270 million loan for the Nhon Trach 1 Power Plant and $300 million for the Dung Quat oil refinery. It has also guaranteed an export credit loan of $96 million for the Vung Ang Thermal-power Plant.

Standard Chartered Bank is co-financing a loan worth $250 million for the Dung Quat refinery.

Nguyen Tien Dung, deputy director general of PetroVietnam, said the group needed a huge investment capital for development and that it had so far secured loans of $3 billion. Derivative transactions would help the company minimise its risks, he said.

Derivatives were important because most companies believed interest rates were now at rock bottom and would rise, said Saranya Skontanarak, head of global markets at Standard Chartered Bank (Viet Nam) Ltd.

A representative of BNP Paribas said: "I strongly believe that PetroVietnam will make use of the ISDA agreements to manage and reduce its financing costs." — VNS