BIDV sells over VND3.1 trillion of bonds

September 19, 2013 | 10:27

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Bank for Investment and Development of Vietnam (BIDV) on Monday announced that it has sold over VND3.1 trillion worth of long-term bonds to raise funds for huge projects in the country.

The bonds were issued on August 30, carrying a term of 10 years and one day and interest rate of 10.5% per annum in the first five years. For the remaining period, if BIDV does not buy the bonds back, the interest rate will be 11% per annum.

The interest rate is considered high at present as five-year government bond now carries a coupon of just 8.5% per annum and that with a 15-year tenor bears a rate of 9% per annum.

Government bonds rates continued to increased slightly on the secondary market last week, staying at 7.68% per annum for two-year term, 7.94% for three years and 8.64% for five years.

BIDV has the right to buy back all the bonds before they fall due. However, the bank cannot buy a part of the bonds within five years after the issuance date.

Currently, short-term mobilization capital accounts for over 95% in local banks. Therefore, they are short of long-term capital to finance large projects in the country.

Aside from BIDV, many banks and large enterprises also have plans to mobilize long-term funds from the local and international bond market. However, the issuers have to consider issuance time carefully as it will decide success of the bond issuance.

SGT

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