Issuing Tens of Thousands of Billion Dong Worth of Unsecured Bonds in August

The Agricultural and Rural Development Bank (Agribank) has recently announced the successful issuance of 100,000 bonds to the public, totaling VND 10,000 billion. According to Agribank’s announcement, 5,079 investors participated in this issuance, including 5,023 individual investors and 56 institutional investors.

The bonds issued by Agribank this time have a 10-year term and an interest rate of the reference rate plus a margin of 2%/year.

The reference rate is calculated as the average 12-month VND savings deposit rate, with interest paid at maturity, of four banks: BIDV, Vietinbank, Agribank, and Vietcombank as of the interest rate determination date. The bonds have a 10-year term. In the last five years before maturity, if Agribank does not repurchase the bonds under its call option, the margin will increase to 3% per annum.

These bonds are non-convertible, non-warrant-attached, unsecured, and eligible to be included in Agribank’s Tier 2 capital.

Viet Nam Thriving Bank (VPBank) has also just issued its first bond lot of the year 2024, totaling VND 4,000 billion. This lot of bonds is unsecured, has a three-year term, and a fixed interest rate of 5.5%/year.

At the beginning of August, Military Bank (MB) reported the successful private placement of VND 4,000 billion of unsecured bonds with a three-year term and a fixed interest rate of 5.45%/year. Previously, MB had successfully issued VND 15,000 billion of unsecured bonds in June and July.

In the past three weeks, Orient Commercial Joint Stock Bank (OCB) has raised VND 5,000 billion from issuing unsecured bonds to investors. These bond lots have a term of 2-3 years and a fixed interest rate of 5.6%/year

Since the beginning of August, the Bank for Investment and Development of Vietnam (BIDV) has successfully issued two lots of bonds with a 6-year and 8-year term, respectively, totaling VND 2,500 billion. These are also unsecured bonds with interest rates for the first term of 5.58%/year and 5.88%/year, respectively. The bond interest rates are 1-1.3 percentage points higher than the average 12-month deposit rate of the Big4 banks.

During the same period, Saigon-Hanoi Commercial Joint Stock Bank (SHB) successfully issued unsecured bonds worth VND 2,000 billion with a three-year term and an interest rate of 6.3%/year.

After successfully raising more than VND 13,000 billion in July, Asia Commercial Joint Stock Bank (ACB) continued to issue two lots of private placement bonds in August, totaling VND 670 billion. These are also non-convertible, unsecured bonds with a term of 3-5 years and an interest rate ranging from 6-6.1%/year for the first year, which is quite attractive compared to ACB’s current deposit interest rates (up to 5.1%/year).

In addition to the issued bond lots, many banks also plan to issue a large number of bonds in the future.

ACB’s Board of Directors has recently approved a plan to issue the second private placement bond in 2024 with a maximum total value of VND 15,000 billion. These bonds are non-convertible, non-warrant-attached, and are not secondary debt of ACB.

VietinBank has announced plans to issue unsecured public bonds totaling VND 8,000 billion. These bonds have a term of 8-10 years, with an interest rate 1.05% – 1.15% higher than the average 12-month savings deposit rate of the Big4 banks during the respective periods.

Recently, Viet Capital Bank (BVBank) started a plan to offer VND 5,600 billion of public bonds through transaction offices. In the first phase, 15 million bonds will be offered, with a six-year term and a fixed interest rate of 7.9%/year for the first year.

Not only have banks rushed to raise capital through bond issuance in August, but they have also been the most active bond issuers in the first seven months of 2024. According to Military Bank Securities (MBS), from the beginning of the year to July 18, banks issued bonds worth approximately VND 96,200 billion, an increase of 140% over the same period last year, accounting for 65% of the total corporate bonds issued in the market. The banks with the largest issuance value include Techcombank (VND 17,000 billion), ACB (VND 12,700 billion), and MB (VND 8,900 billion).

According to analysts, banks are increasing their bond issuance to supplement their capital and meet regulatory requirements for capital adequacy ratios. The push for bond issuance comes as deposit growth remains low and credit growth starts to accelerate.

Additionally, in a low-interest-rate environment, banks are motivated to issue new bonds to restructure high-interest-rate bond lots issued in previous years. This explains why banks are both leading issuers of new bonds and major repurchasers of previously issued bonds.

“The joint push by joint-stock commercial banks to issue bonds is aimed at strengthening medium and long-term capital sources to meet the borrowing needs of businesses as credit growth reached 6% in the first half of the year and is expected to further increase to 14% in the last months of the year,” MBS stated.