Vietnam Debt Fund SPC

Region and country of operations: Asia, Vietnam
Jurisdiction of registration: Cayman Islands
Business sector: Fund

Date of agreement (month/year): 6/2021
Finnfund’s financing: up to USD 15,000,000
Share of Finnfund’s financing: 16.7%
Instrument: Loan
Size of project/financing: USD 120,000,000
Environmental and social category: FI-B

Project description

Finnfund is a parallel lender to the IFC’s loan syndication to Vietnam Debt Fund SPC. The fund is sponsored by Dragon Capital Group (DCG) and managed by Dragon Capital Management (HK) Limited.  The fund’s target size is USD 120 million.

The investment objective is to

• invest in a portfolio of corporate bonds which are mainly denominated in VND and issued by mid- to large-sized private companies in Vietnam;
• mainly invest in bonds from the primary market; and
• actively seek for capital gain by selling in the secondary market.

Vietnam is considered one of the most stable countries in Southeast Asia. The economy expanded 2.91% in 2020 after having posted gross domestic product growth above 7% for two consecutive years with the economy set to bounce back to 6.8% in 2021.

Main development impact

The fund targets to support government of Vietnam’s target to increase corporate bond market by enhancing a new investable asset class to the market to mobilise non-bank investors, diversification of the investor base, with an increase in domestic institutional investors. The main identified development impacts are

• access to capital markets for Vietnamese companies;
• increased participation of issuers and institutional investors in the Vietnamese local currency bond market; and
• greater market integration through competitive pressure, demonstration and replication, and market enabling channels.