Vietnam shipbuilder Vinashin defaults on loan: report

Nearly-bankrupt Vietnamese shipbuilder Vinashin has defaulted on a loan to international lenders and told them it will pay only interest, the Wall Street Journal reported Friday.

Citing a person familiar with the matter, the paper said Vinashin (Vietnam Shipbuilding Industry Group) did not meet a deadline earlier this week to pay the first 60 million dollar instalment on a 600 million dollar loan arranged by Credit Suisse in 2007.

However, the paper’s source called it “positive” that the state-owned company was willing to pay interest.

Vinashin has agreed to meet creditors in mid-January to discuss repayment of the loan principal, the source said.

A Vinashin spokesperson declined comment to AFP on the report.

Company chairman Nguyen Ngoc Su was quoted in official media on Monday as saying the firm had no way to immediately make the payment and was “still waiting for the final answer” on a request to defer it for 12 months.

The government has said Vinashin must settle its own debts — which total at least 86 trillion dong (4.4 billion dollars).

Despite those comments, speculation has grown that the government would step in to help Vinashin.

On Wednesday a Vietnamese newspaper reported that Hanoi had granted tax concessions to Vinashin, after speculation authorities would find a way to help the firm meet its debt deadline.

Among the concessions, the state-owned firm will get a grace period until December 31, 2011 for paying its taxes, Tuoi Tre reported, citing the Ministry of Finance.

State-linked Tuoi Tre did not give the amount of tax involved or the period it was due for.

The one-year delay coincided with the deferral Vinashin had reportedly sought for repayment of its international debts.

One foreign analyst said Wednesday that he thought the tax concessions were the government’s way of indirectly bailing out the firm amid concerns of wider economic impact from the Vinashin case.

Global ratings agency Standard & Poor’s on Thursday lowered Vietnam’s sovereign credit rating, the country’s second downgrade by an international agency in recent days.

S&P raised concerns about Vietnam’s banks as it lowered the long-term foreign currency sovereign credit rating to BB- from BB, while the local currency rating dropped to BB from BB+, with a negative outlook.

Bonds in all of these categories are considered speculative, or junk bonds.

“The ratings downgrade reflects Standard & Poor’s assessment of a greater susceptibility of Vietnam’s banking system to a financial or economic shock,” the firm’s credit analyst, Kim Eng Tan, said in a statement.

In separate comments to AFP, Tan said troubles at Vinashin “contribute to the uncertainties affecting the banking sector” but were not by themselves a key factor in the downgrade.

On December 15 Moody’s Investors Service downgraded Vietnam’s government bond rating to B1 from Ba3, maintaining a negative outlook.

It cited the risk of a balance of payments crisis, rising inflation and the debts of Vinashin.

Moody’s said a default on Vinashin’s foreign obligations would likely damage the ability of the country to raise affordable foreign market financing for its still largely unmet infrastructure needs.

Tags: Vietnam Shipbuilding industry, Vinashin