A Vietinbank employee processing transactions with a customer in its office (Photo: VNA) Bond issuance of the real estate sector led the bond market in the firstquarter of 2021 with a value of nearly 15.6 billion VND (679.6 million USD),but this sector fell into second place at the beginning of the second quarter.
The market bulletin compiled by the Vietnam Bond Market Association (VBMA)showed that from early April to May 4, the total value of bond issuance of realestate companies reached more than 10.94 trillion VND (476.9 million USD).Meanwhile, total bond issuance of the banking sector was worth 15.2 trillion VND(662.2 million USD), surpassing the real estate sector.
The order continued in May when the total value of bonds issued by banksreached 15.7 trillion VND (638.8 million USD), accounting for 73 percent of thetotal bond issuance, while bond issuance from the real estate sector was worth 3.62trillion VND (157.8 million USD), accounting for 17 percent. The data waspublished by Fiingroup, a company that provides financial and businessinformation services.
Recently, VietinBank (CTG) issued 8-year bonds with a value of 1.5 trillion VND(65.4 million USD) and 15-year bonds worth 85 billion VND (3.7 million USD)with interest rates ranging 6.5 - 6.7 percent per year.
Asia Commercial Bank (ACB) also just announced the issuance of 2 trillion VND (87.2million USD) of 3-year bonds to two domestic securities companies with aninterest rate of 4 percent/year.
In May, VPBank (VPB) also issued bonds three times, including an issuance of 500billion VND (21.8 million USD) of 3-year bonds.
Previously, VPBank also raised 4 trillion VND (174.4 million USD) by issuing3-year bonds in late April.
“Bonds are now a hot asset in the financial market, attracting many individualand institutional investors because its deposit interest rates are higher thanthat of savings,” Dr. Nguyen Tri Hieu, senior financial expert, told Bnews.
Bonds issued by banks are assessed to be the safest assets because of theirhigh liquidity. In addition, banks operate under the strict supervision of theState Bank of Vietnam (SBV).
Meanwhile, for bonds issued by real estate companies, although the interestrates are 3 - 4 times higher, it will be difficult for investors to control howthese bond issuers spend the money.
Thus, Dr Hieu advised investors to be careful with high-interest bonds becausethe higher the rate of return, the more risks there will be. And investors needto learn carefully about the financial situation of the businesses and theliquidity of the products.
In the second quarter of 2021, experts from SSI Securities Corporation (SSI)said that SBV’s strict control of credit in potentially risky fields such asreal estate and securities will increase demand for capital mobilisationthrough the bond channel of real estate businesses, especially those withlimited collateral for loans.
Interest rates of real estate bonds, therefore, may increase and be moreattractive than other bonds. But SSI also warned investors to be cautiousbecause the real estate market is quite hot, the number of unsecured bonds orbacked by stocks is also rising, which will increase risks for investors.
On the other hand, experts forecast that demand for issuing bonds of commercialbanks in 2021 will be higher, especially bonds to increase capital to helpbanks supplement tier 2 capital (supplementary capital), increase theproportion of medium and long-term capital and improve the capital adequacyratio (CAR).
Hence, bond interest rates issued by commercial banks are also expected toslightly increase in the second half of 2021 when the competition on depositinterest rates among banks increases to ensure credit growth./.
VNA
