Issuing 366,000 billion VND in bonds, interest rate 10%/year

Interest rates on newly issued bonds in October for many businesses are up to over 10%/year, in some places up to 12%/year, twice as high as savings interest rates.

According to market reports bonds newest enterprise of JSC Vietnam Investment Credit Rating (VIS Rating), the amount of new bonds issued in October 2024 only reached 28,100 billion VND. Cumulatively from the beginning of the year until now, the amount of new bonds issued has reached 366,000 billion VND, higher than the total issuance of the whole year 2023.

Accumulated in the first 10 months of the year, the number of issues bonds The new issuance has reached 366,000 billion VND, higher than the total issuance of the whole year 2023. Many businesses have a interest rate over 10%/year

Bond interest rates are higher than savings (photo: Nhu Y).

According to VIS Rating, the bank Commercial bonds accounted for the majority of the new issuance, with VND15,800 billion, of which 20% were Tier 2 bonds - bonds issued by banks to raise capital for other activities. In addition, there are banks that have continuously issued bonds since the beginning of the year.

Banks have always been at the forefront of issuing corporate bonds. The fact that commercial banks are stepping up capital mobilization through bonds, despite the cost of capital being more expensive than the interest rate on 12-month term deposits, is believed to be aimed at supplementing the medium- and long-term capital structure in the context of gradually recovering loan demand.

According to data from State Bank, credit growth as of October 31 reached 10.08% compared to the end of 2023 and expects credit growth this year to reach 15%.

List of new bond issuances in October with banks accounting for a large number (photo: Ngoc Mai).

Regulations on capital safety from the State Bank clearly state that from the end of 2023, banks are required to adjust the ratio of using short-term capital for medium- and long-term loans to 30% instead of 34% as before.

The loan-to-deposit ratio is also required to fall below 85%. Therefore, due to this regulation, banks have to seek additional capital through the issuance of long-term bonds.

Analysts predict bond issuance activities business will be more vibrant when entering the fourth quarter, the capital demand of enterprises recovers in the context of the real estate market starting to warm up as well as the need to expand production and business is actively following the economic recovery. Accordingly, the banking group will continue to promote bond issuance to supplement capital to meet lending needs.

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