The idea was shelved in April, with the government conceding that it would need to clear London Club arrears, but in the past few weeks Nomura and Merrill are understood to have approached the Vietnamese finance ministry. (The first approaches apparently came after the ruling Communist Party's five-year Congress in early July.)

The ministry, which would be the issuer of the bond, is working on providing the two foreign banks with updated statistics on national budget forecasts, foreign reserves and debt policy as part of the due diligence process. The main objective of launching a bond would be to establish credibility in the international capital market, in preparation for a time when Vietnam is in genuine need of larger sums. ''You can't just sit here and wait for ODA (official development assistance) to come in. You have to enter the capital markets now, establish your credibility for the time when you really need the money and have demonstrated an ability to repay,'' said one banker familiar with the proposed eurobond issue. A debut issue soon would also help familiarise the Vietnamese with the commercial rigours of the international capital markets.