According to the Ministry of Finance, in July 2024, there were 56 successful private corporate bond issuances, totaling approximately VND45 trillion, down 15 percent compared to June but up 57 percent year-on-year. Banks continued to lead the market, with successful issuances amounting to VND35.1 trillion, accounting for 78 percent of the total issuance volume, followed by real estate companies, which issued VND5.5 trillion (12.1 percent), and companies in other sectors, with approximately VND4.4 trillion (9.9 percent).

Economists forecast a significant improvement in bond issuance in the coming months

In the first seven months of 2024, approximately VND173.6 trillion worth of corporate bonds were issued, 2.5 times higher than the same period last year. Notably, bank bonds accounted for 72 percent of the total issuance volume. Banks with the largest issuances include ACB (VND23.2 trillion), TCB (VND22 trillion), and MBB (VND18.6 trillion). Bank bonds were issued with annual interest rates averaging 6.4 percent.

The number of banks continuing to participate in the bond market in August and the rest of the year is expected to remain high. Since the beginning of August, several banks have continued to announce public bond offerings. For instance, Ban Viet Bank (BVBank) recently announced its first public bond issuance through direct sales at transaction points. The bank plans to conduct six rounds of issuance, totaling approximately 56 million bonds. The first round will offer 15 million bonds with a face value of VND100,000 each, a six-year term, and a fixed annual interest rate of 7.9 percent for the first year, aiming to raise VND1.5 trillion. From the second year, the reference interest rate will be the 12-month personal savings deposit rate applied by the four major state-owned commercial banks, plus a margin of 2.5 percent per year.

The Asia Commercial Bank (ACB) has also approved its second private bond issuance plan for the fiscal year 2024, with a maximum total value of VND15 trillion. Specifically, the bank will issue up to 150,000 bonds with a face value of VND100 million each, and a maximum term of five years.

Agribank and HDBank are also conducting public bond offerings, aiming to raise several trillion VND during this period. Agribank is issuing VND10 trillion worth of bonds to institutional and individual investors, with an interest rate of approximately seven percent per year. HDBank is issuing a seven-year bond series to raise a total of VND1 trillion with a floating interest rate applied throughout the bond’s term. The interest rate will be calculated based on the reference rate plus a margin of 2.8 percent per year.

According to financial experts, bank bonds attract investors not only due to their significantly higher interest rates compared to savings rates, ranging from 7-8 percent or more, but also because of the safety and credibility of the issuing institutions. Considering the growth, profitability, and safety of banks, investors have greater confidence in holding these bonds. Many banks also repurchase bonds before maturity, strengthening investors’ trust in these securities.

There were 56 successful private corporate bond issuances in July 2024

The macroeconomic analysis report for August released by Viet Dragon Securities Corporation (VDSC) shows that in the corporate bond market, the banking and real estate sectors dominate issuance activities, with banks being the primary players. Notably, in the first seven months of 2024, while banks continued to be active in the market, few real estate companies were able to restructure their debts through new issuances or early repurchases. Additionally, the cost of issuing corporate bonds in the real estate sector remained high during these seven months, reflecting the elevated risks for these companies.

VDSC said that approximately VND98 trillion worth of corporate bonds were repurchased in the first seven months of 2024, a year-on-year decrease of 32 percent. Repurchase activities were concentrated in the banking sector, followed by the real estate and construction sectors. Banks with the largest repurchase amounts included TCB with nearly VND14 trillion, MBB with around VND12.7 trillion, and OCB with approximately VND8.4 trillion.

Economists forecast a significant improvement in bond issuance in the coming months. The demand for borrowing and issuing bank bonds is expected to increase, helping realize the 14-15 percent credit growth target set for 2024.