Bank coupon rate hits record high of 10% per year

Bank coupon rate hits record high of 10% per year

Statistics show that coupon rates on bank bonds climbed from 8 per cent at the end of June to 9 per cent in July, eventually reaching 10 per cent in early August.

The 10 per cent rate is also significantly higher than the long-term deposit interest rates currently offered by many banks. VNA/VNS Photo

Amid surging demand for capital, commercial banks have been ramping up bond issuance, with rates reaching a record high of 10 per cent per year.

Sacombank has recently announced the completion of three private bond placements in July, raising a total of VNĐ3.65 trillion (US$139 million) to raise medium- and long-term capital, strengthen financial capacity, enhance risk resilience and meet regulatory capital requirements.

According to filings with the Hanoi Stock Exchange (HNX), the three bond tranches have a six-year term and carry a fixed interest rate of 10 per cent per year throughout their duration.

The 10 per cent rate has set a new benchmark for bonds issued by the banking sector. Statistics show that coupon rates on bank bonds climbed from 8 per cent at the end of June to 9 per cent in July, eventually reaching 10 per cent in early August.

This rate is also significantly higher than long-term deposit interest rates currently offered by many banks.

Aside from Sacombank, many other banks have also stepped up bond issuance to meet rising demand for medium- and long-term capital.

BIDV recently issued two additional batches of bonds, bringing the total value raised since the beginning of the year to VNĐ6.67 trillion. These bonds carry a fixed interest rate of 8.2 per cent per year.

Vietcombank also offered bonds with a fixed interest rate of 7.9 per cent per year, approximately three percentage points higher than the rate offered in its bond issuance late last year.

VietABank issued bonds worth VNĐ100 billion with an interest rate of up to 9 per cent per year, significantly higher than the bank's deposit interest rates for the same term.

Meanwhile, MB completed 10 bond issuances, raising nearly VNĐ6 trillion with interest rates of up to 8.4 per cent per year.

VPBank previously raised VNĐ1 trillion through three-year bonds at a fixed rate of 8.6 per cent per year, while OCB also conducted three bond issuances, raising VNĐ3 trillion with a peak interest rate of 8.6 per cent per year.

Many banks are also preparing significant bond issuance plans for the final months of the year. HDBank has approved a plan to issue up to 100 million bonds with a total par value of VNĐ10 trillion, each bond having a face value of VNĐ100,000, divided into two issuance tranches.

According to the corporate bond market report for the last week of July by the Vietnam Bond Market Association (VBMA), 14 corporate bond issues totalling VNĐ8.2 trillion were recorded during the week, involving companies in the real estate and banking sectors.

The value of corporate bond issuances in the first seven months of the year reached VNĐ289.91 trillion.

Meanwhile, the total value of early bond redemptions in the same period was nearly VNĐ172.1 trillion, a 12 per cent increase compared to the same period last year. The banking sector continued to lead this activity with more than VNĐ149 trillion, accounting for 87.5 per cent of the total value of early redemptions.

According to the VBMA, the total value of corporate bonds maturing by the end of this year is estimated at VNĐ106.15 trillion. The real estate sector accounts for the largest share at VNĐ59.62 trillion (55.6 per cent of the total value of bonds maturing this year), followed by the banking sector at VNĐ20.75 trillion (19.4 per cent). 

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