BIDV sells over VND3.1 trillion of bonds
BIDV sells over VND3.1 trillion of bonds
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.
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