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ARTICLE · 17 JUNE 2015

Refinancing A Domestic Loan With An Offshore Loan?

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Vietnamese regulations and policy are certainly not in favor of using foreign loans to refinance existing domestic loan debts.

VietnamFinance and Banking
Duane Morris
Duane Morris
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Vietnamese regulations and policy are certainly not in favor of using foreign loans to refinance existing domestic loan debts. However, the State Bank of Vietnam (SBV) could feasibly exercise its discretion to permit such loans if applicants made a compelling case.  Prudent cross-border lenders will require Vietnam borrowers to disclose the purpose of a loan and seek clarification from the SBV in case of refinancing needs.

The SBV's Circular 12/2014/TT-NHNN on the conditions for enterprises to borrow non-government guaranteed loans explicitly permits taking out foreign loans to restructure other foreign loans, so long as they do not increase the cost of borrowing. In other words, a new foreign loan at a lower interest rate to refinance another foreign loan should be permitted.

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