Banks race to issue bonds to raise capital

Many banks have issued large amounts of bonds to raise thousands of billions of VND, pushing interest rates to around 8% per year, much higher than that of normal savings.

BVBank has recently announced the public offering of bonds in the first phase through direct issuance at the bank’s transaction offices. BVBank plans to have six issuances with a total of 56 million bonds. In which, the first phase will offer 15 million bonds, with a term of six years and a fixed interest rate of 7.9% per year for the first year. From the second year, the reference interest rate is the 12-month individual savings interest rate of four banks Vietcombank, VietinBank, BIDV and Agribank plus a margin of 2.5% per year.

With each bond having a face value of 100,000 VND, BVBank expects in the first phase, it will mobilise 1.5 trillion VND from the public bond channel. The bank targets individual customers and organisations in its public bond offering this time.

The board of directors of ACB has recently also approved a plan to issue individual bonds for the second time in the 2024 fiscal year with a maximum total scale of 15 trillion VND. Accordingly, ACB will issue a maximum of 150,000 bonds with a par value of 100 million VND per bond. The issuance price is equal to the par value, with a maximum term of five years. The purpose of bond issuance is, according to ACB, to serve lending and investment needs and ensure compliance with safety indicators as prescribed by the State Bank of Vietnam.

The bonds have a maximum term of five years and a fixed or floating interest rate, depending on market demand. The offering subjects are institutional investors who meet the legal regulations for professional securities investors.

Previously, Agribank and HDBank also offered bonds to the public to raise thousands of billions of VND. This year, Agribank offered 10 trillion VND in bonds to the public to institutional, individual, and foreign investors at all its transaction offices nationwide. Agribank’s bond interest rate is nearly 7% a year.

At HDBank, the public bond issue has a term of seven years. The bank expects to raise 1 trillion VND with a floating interest rate, applied to the entire term of the bond. The interest rate is calculated by the reference interest rate plus a margin of 2.8% per year.

A report by the Vietnam Bond Market Association (VBMA) showed that last month, there were 33 private corporate bond issuances worth 31.3 trillion VND and one public issuance worth 395 billion VND.

There have been 175 private bond issuances worth 168 trillion VND and 12 public issuances worth more than 4.5 trillion VND to date this year. Among the private issuances, rated bonds account for 7% of the value.

Banking was the industry with the largest proportion of bond issuance value in the first seven months of this year, accounting for 68.2% of the total issuance value./.