CII Seeks Outside Buyers for VND 6,720B Convertible Bond at 14.5% Coupon

Overview

CTCP Đầu tư Hạ tầng Kỹ thuật TP.HCM (HOSE: CII) has reopened distribution of its VND 6,720 billion convertible bond issue to outside investors through Vietcap after the existing-shareholder tranche closed undersubscribed. The 25-year paper carries a 0% coupon for three years, then a fixed 14.5% per annum, and converts at VND 10,000 per share. Proceeds are earmarked for the HCMC – Trung Luong – My Thuan expressway expansion.

Key Facts

• Total issue size of approximately VND 6,720 billion, equivalent to about 67.2 million bonds at a VND 100,000 face value each.
• Coupon structure: 0% per annum for the first three years, then a fixed 14.5% per annum from year four, paid quarterly.
• Conversion price set at VND 10,000 per share; each VND 100,000 bond converts into 10 CII shares.
• Vietcap Securities (CTCP Chứng khoán Vietcap) acts as issuing agent; subscription and payment window runs from 22 October to 15:00 on 3 November 2026.
• HFIC, a state financial investor holding roughly 4.08% of CII, registered to sell more than 27.4 million bond subscription rights, but no investor registered to buy them.
• If the full VND 6,720 billion is placed and remains unconverted, annual interest obligation from year four would reach about VND 974 billion.
• CII closed at VND 14,050 on 22 October 2026, about 40.5% above the VND 10,000 conversion price.

What Happened

CII announced that it will continue distributing convertible bonds under code CII426001 to external investors following the conclusion of the offering to existing shareholders. The company disclosed the plan in a corporate notice, stating that the prior tranche was not fully taken up by the current shareholder base, leaving a residual balance to be placed with outside buyers. Vietcap is named as the issuing agent, with the subscription and payment period running from 22 October to 3 November 2026.

The structure is unusual for the Vietnamese market. The bonds carry a 25-year tenor with no coupon for the first three years, then step up to a fixed 14.5% per annum from year four, settled every three months. The conversion price of VND 10,000 per share implies 10 shares per VND 100,000 bond. The article does not disclose how much of the VND 6,720 billion was subscribed in the shareholder tranche, nor the final allocation to external investors. HFIC’s decision to offer more than 27.4 million subscription rights for sale, with no takers, indicates limited appetite among existing holders at the offered terms.

Market Context

CII trades on HOSE and closed at VND 14,050 on 22 October 2026, down 0.73% on the session, leaving the shares roughly 40.5% above the VND 10,000 conversion price. That gap matters: conversion is dilutive relative to the current price only if the stock holds above the strike, and bondholders effectively hold an equity option struck well below market. The stock sits in the infrastructure and real estate complex, where BOT toll-road operators have traded on project pipeline and interest-cost expectations rather than near-term earnings. The 14.5% step-up coupon is high relative to bank funding and signals the cost CII is willing to pay for long-dated, non-recourse-style capital.

Strategic Significance

The bond is best read as equity in waiting. A 0% coupon for three years defers cash interest until the expressway expansion approaches its targeted 2029 tolling start, aligning the funding cost with the project’s revenue ramp. The 14.5% step-up from year four is the price of that deferral and creates a hard incentive for CII to either convert the bonds or refinance before the coupon bites. For long-term holders, the key variable is dilution: full conversion at VND 10,000 would add roughly 672 million shares, a substantial increase against the existing register. The undersubscription by existing shareholders, and HFIC’s inability to sell its rights, suggests the market is pricing that dilution and the 25-year tenor cautiously.

What to Watch

• Final placement results after the 3 November 2026 subscription deadline, including the amount taken up by external investors.
• Any disclosure of the exact residual balance left from the existing-shareholder tranche.
• Progress and disbursement milestones on the 96 km HCMC – Trung Luong – My Thuan expansion, with total investment of about VND 36,000 billion.
• CII’s Q3 2026 earnings release and any update on interest-cost guidance ahead of the year-four coupon step-up.
• Share count and dilution disclosures in the next annual report or conversion notices.