Agribank plans to issue VND10 trillion worth of bonds in 2023. The bond has a maturity of eight years, and face value of VND100,000, while interest is paid once a year.

The bond interest rate is calculated by the reference interest rate (the average interest rate of Vietnam dong 12-month deposit interest rate of the ‘big four’ – BIDV (Bank for Investment and Development of Vietnam), VietinBank, Agribank and Vietcombank) plus the margin of 2 percent per annum. At this time, Agribank’s bond interest rate is 7.25 percent per annum.

Agribank’s total assets have reached VND1.9 quadrillion to date, while its capital source has reached VND1.8 quadrillion and outstanding loans VND1.5 quadrillion.

Other commercial banks are also rushing to issue bonds to seek more long-term capital. VietinBank has reported successful issuance of bonds to the public in the second stage which would mature in eight and 10 years.

The total par value of the bonds issued was VND4 trillion, including VND1.5 trillion worth of 8-year bonds, VND2.5 trillion worth of 10-year bonds. The bank collected VND3.092 trillion after the issuance.

The 8-year bond interest rate is calculated by the reference interest rate plus 1.2 percent per annum, while the 10-year bond interest rate is calculated by the reference interest rate plus 1.3 percent. The reference interest rate is the average interest rate of VND 12-month deposits.

The report of the bank showed that 1,171 individual investors and 45 institutional investors have bought 8-year bonds, and 441 individual investors and 44 institutional investors 10-year bonds.

As of November 1, the total immature bond value of the bank had reached VND40 trillion.

VietinBank said that the bond interest rate applied to the November 18 interest payment period is 6.25 percent per annum for 10-year (2021-2031) bonds, or one percent higher than the reference interest rate.

With the defining of the reference interest rate (average interest rate of 12-month deposit interest rates of the ‘big four’), the four banks will have a big impact on the face of the bond market.

Investing in corporate bonds is an alternative choice for many people who are seeing deposit interest rates decreasing gradually.

In the third quarter alone, BIDV issued VND700 billion worth of bonds, including VND500 billion of 20-year bonds with the interest rate of 7.7 percent. ACB reported it issued VND6.5 trillion worth of 2-year bonds with the interest rate of 6.5 percent per annum.

Meanwhile, MSB issued VND1 trillion worth of 3-year bonds (7.5 percent), Bac A VND800 billion (6.5 percent) and HDBank VND500 billion of 7-year bonds.

The figures of VND2.5 trillion and VND6 trillion were reported for VietinBank and Techcombank, respectively.

Most recently, LPBank launched its fifth bond issuance, mobilizing VND500 billion of capital out of the total VND4.5 trillion of the five issuance campaigns.

On October 25, BIDV announced the successful issuance of VND2.5 trillion worth of green bonds in accordance with ICMA (International Capital Market Association) principles in the domestic market. The funds raised at the issuance will be used to pay for green energy projects which aim at saving energy, reducing emissions and protecting the environment.

The bonds were ranked by Moody’s, with no mortgaged assets, no secondary debt and no payment guarantee, which showed a high credit ranking in capability and prestige of the issuer. The investors were insurers and fund management companies belonging to the world’s leading insurance groups.

Bonded debt has been a headache for many businesses, especially real estate firms, over the last two years.

The third quarter financial report of Phat Dat Real Estate showed the bond balance of VND980 billion by the end of the quarter, most of which will become mature by year end. The pressure on businesses’ bond interest payment has caused share prices of many companies to drop dramatically.

Vingroup, owned by the dollar billionaire Pham Nhat Vuong, stated that the group on October 25 wrapped up a transaction to sell $250 million worth of international bonds with interest rates of 9.5-10 percent per annum.

According to VNDirect Securities, as of early October, more than 50 bond issuers had reached a consensus with bondholders on the payment deadline extension.

Manh Ha