Banks expedite massive bond issuances to raise capital before new year

Last week, major state lender VietinBank announced its first-round public offering of 40 million bonds, valued at $166.7 million.

Photo: baodautu.vn

Accordingly, the bank will issue two bond series CTG2432T2/01 and CTG2434T2/01, with 30 million and 10 million bonds respectively, valued at $125 million and $41.7 million.

The first bond series has an eight-year term with an interest rate margin of 1.05 per cent per year above the average 12-month deposit rate of the big four (Vietcombank, VietinBank, BIDV, and Agribank) banks.

The second series has a 10-year term with a margin of 1.15 per cent above the same benchmark rate.

The bonds are priced at VND100,000 ($4.15) each, and subscriptions are open from December 23, 2024, to January 15, 2025. Investors must purchase a minimum of 100 bonds, equivalent to VND10 million ($415).

Earlier, BVBank launched its second bond issuance for 2024-2025 to increase medium- and long-term capital for business operations, meet growing credit demand, and replenish capital under current regulations.

The bank will issue 13 million bonds, each priced at VND100,000 ($4.15) with a six-year term. The first year’s fixed coupon rate has been set at 8.2 per cent, adjusting in subsequent years to a reference rate plus 2.5 per cent.

Subscriptions run from December 16, 2024, to January 6, 2025.

On September 10, BVBank completed its first issuance of 14.68 million bonds with a six-year term, priced at $4.15 each, raising $61.2 million.

This issuance offered a fixed 7.9 per cent coupon rate for the first year, transitioning to a floating rate thereafter with annual interest payments.

In December alone, several banks successfully issued bonds, raising trillions of dong (tens of millions of US dollars).

On December 19, TPB successfully issued 500 bonds, priced at VND100 million ($4,150) each, with a 10-year term and a 6.2 per cent coupon rate, raising $20.8 million.

On December 18, ACB issued 250 bonds with a five-year term, priced at VND1 billion ($41,700) each, raising $10.4 million at a 6.1 per cent coupon rate.

On December 13, VIB announced the completion of its ninth private bond issuance, with a seven-year term. Priced at VND1 billion ($41,700) per bond. 2,000 bonds were issued, raising $83.3 million at a 7.48 per cent coupon rate.

Earlier, on December 4, VIB completed its eighth issuance, raising $83.3 million with a three-year term and a 5.3 per cent interest rate.

In late November and early December, Eximbank issued 180 bonds, also priced at VND1 billion ($41,700) each, with a five-year term and a 6.4 per cent coupon rate, raising $7.5 million.

OCB also conducted multiple bond issuances in December, issuing three batches of three-year bonds with coupon rates ranging from 5.5 per cent to 5.6 per cent. Each bond was priced at VND1 billion ($41,700), raising $154 million.

According to a report by MB Securities (MBS), the total value of corporate bonds successfully issued in November approximated $1.5 billion, down 1.9 per cent from October and 8 per cent on-year.

Banks accounted for the largest share, at 71 per cent. Notable issuances came from Techcombank, with $154 million worth of bonds with a 36-month term and a 5 per cent coupon rate, and ACB, with $83.3 million worth of bonds with a 24-month term and a 5 per cent coupon rate.

FinnRatings, a reputed credit rating agency in Vietnam, highlighted that 2024 has been a busier year for bank bond issuance compared to previous years, with accelerated credit disbursement in the latter half.

To support credit growth, banks are planning to augment capital sources through equity or debt, including corporate bonds.

“Moreover, since banks remain the primary investors in corporate bonds under current legal frameworks, diversifying funding channels for businesses will lay the groundwork for a continued recovery in the bond market,” FinnRatings noted.

Bond issuances surge despite lack of credit ratings A report by the Vietnam Bond Market Association shows that in the first four months of this year, the total value of corporate bond issuances amounted to $1.5 billion and included six initial public offerings and 30 private placements.

Economy on track to end year on upbeat note: UOB UOB (United Overseas Bank) maintains Vietnam’s full year growth forecast at 6.4 per cent, which implies 5.2 per cent on year in the fourth quarter.

Banks face difficulties in balancing capital raising and lending Banks often use their charter capital to compensate for a capital shortage, as lending exceeds capital raising.