Banking bonds race before new decree takes effect

15-Aug-2020 Intellasia | Dien dan Doanh nghiep | 6:02 AM Print This Post

The bond issuances were successfully carried out by Credit Institutions (CIs) in the context of a sharp drop in savings interest rates due to the COVID-19 translation.

This race of CIs accelerated before Decree 81/2020/ND-CP amending Decree 163/2018/ ND-CP on corporate bond issuance took effect from September 1, 2020.

The game for big guys

At the beginning of August, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) reported the results of bond issuance for the first phase of 2020 with a completed sale of 70,000 bonds and attracting seven trillion VND.

According to their plan, Vietinbank will have two bond issuance sessions with a total value of 10 trillion dong this year. With the balance of three trillion dong, Vietinbank also quickly issued one trillion dong, divided equally in two enterprises, completed in July 2020. This bank currently has about 57 trillion dong valuable papers.

Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) also raised from bonds worth one trillion dong. In April and May, this bank has mobilised bond capital with interest rates of 6-6.4%, 3-year term, paying interest every 12 months for 6.5 trillion dong raised. As at the end of June 30, 2020, VPBank’s valuable paper assets must not be less than 54 trillion dong…

Take advantage of new rules

According to Viet Dragon Securities Corporation (VDSC), in the second quarter, the banking industry issued with amount of 46 trillion dong, in which Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) took the largest portion with one third of the total value of bonds.

BIDV or Vietinbank is constantly being named in the list of major bond issuers, when this debt instrument has been contributing to supplement tier 2 capital (with bonds from 5-year term), helping to improve minimum capital adequacy ratio (CAR) for them. CIs themselves also see this as a channel to create a stable source of mobilisation, even cheap price in the long term.

Compared to other businesses, credit institutions are less affected by Decree 81/2020/ ND-CP, amending Decree 163/2018/ ND-CP. Because credit institutions limit tearing up the issuances with a minimum period of 6 months. They only have to stick to the rule how the release is completed in 90 days. Large equity is also an advantage of credit institutions in order not to limit the mobilised value of bonds to no more than 5 times.

Banks are still and will continue to take advantage of before the Decree 81/2020/ND-CP takes effect, making good use of attracting the amount of capital from bond issuance each time with small value, easier to mobilise and less than 100 investors. Enlistment at this time is valuable when the playground owners are individual investors.

 


Category: Finance, Vietnam

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