U.S. insurer Prudential has bought 30-year bonds issued by the Vietnamese government at a whopping VND500 billion (US$22.32 million) and pledged to increase the investment by 12 times within this year.
Prudential received a certificate for the purchase from the Ministry of Finance on Monday.
This is the first time Vietnam has issued bonds with a term of 30 years.
A company representative told Tuoi Tre (Youth) newspaper on Tuesday that the insurer has also promised to continue investing an additional VND5.5 trillion ($245.54 million) in Vietnam’s government bonds in 2016.
Prudential will then possess a total of VND6 trillion ($267.86 million) worth of 30-year bonds.
In July 2015, Vietnam raised some VND5.2 trillion ($232.14 million) via 20-year bonds bought by several insurers, with Prudential alone accounting for a record VND3.2 trillion ($142.86 million) investment.
“It is necessary to develop non-bank credit institutions, at a time when the government has the need to issue more bonds to execute its eco-social development plans, while the state budget is tight,” said Tran Du Lich, a member of the lawmaking National Assembly’s Economic Committee.
Non-bank credit institutions include financial companies, financial leasing companies, insurers, and insurance funds.
“There must be legal frameworks and mechanisms for such capital-rich institutions as insurers and insurance funds to join in the government bond market,” he said.
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