Bank bonds attract investors

Data recently released by Vietnam Investment Credit Rating Joint Stock Company (VIS Rating) shows that in the first half of 2024, the amount of newly issued corporate bonds reached VND202,400 billion. Of which, 70% were issued by commercial banks with interest rates much higher than normal savings interest rates.

Race to issue bonds

Typically, the Vietnam Bank for Agriculture and Rural Development (Agribank) has just successfully mobilized VND10,000 billion in public bonds in 2024 for more than 5,000 domestic and foreign individual and institutional investors. Agribank's bonds have an interest rate of 6.68%/year, much higher than the bank's 24-month savings interest rate of 4.8%/year.

Agribank also joins the race to issue bonds to raise capital.

Ho Chi Minh City Development Bank (HDBank) also offered the second batch of bonds to the public with a face value of VND100,000/bond, with a total issuance value of VND1,000 billion. This batch of bonds has a term of 7 years, the floating interest rate is calculated by the reference interest rate plus a margin of 2.8%/year (about 7.5%/year).

Meanwhile, BVBank is offering bonds to the public (phase 1) with a fixed first-year interest rate of up to 7.9%/year. Accordingly, with only VND10 million, individual customers can buy and hold BVBank bonds for a term of 6 years.

Previously, a series of commercial banks also competed to issue bonds to raise capital, such as: MB with 10,000 billion VND, VietinBank 5,000 billion VND, SHB 3,000 billion VND...

According to some investors, these interest rates are more competitive than current savings interest rates. This attracts many people to transfer their idle money from savings to buying bonds to enjoy higher interest rates.

Ms. Ngoc Tu (living in District 7, Ho Chi Minh City) has just decided to use 1 billion VND of idle money to buy bonds issued to the public by a commercial bank with an interest rate of approximately 8%/year. "The real estate market is still quiet, stocks have high risks while gold is not easy to invest in, I decided to choose to buy bonds issued to the public by the bank because the interest rate is higher than savings and the risk is lower than other channels" - Ms. Ngoc Tu explained.

According to Mr. Ngo Minh Sang, Director of BVBank's Personal Clients Division, bank bonds are a safe and effective investment channel. These bonds are issued and offered by the bank itself and will be centrally registered at the Vietnam Securities Depository and Clearing Corporation, and listed on the trading system of the Hanoi Stock Exchange (HNX) after the end of the offering.

What to note when buying bank bonds?

Talking to reporters of Nguoi Lao Dong Newspaper, economic expert - Dr. Dinh The Hien also said that bank bonds are a safe and effective investment channel compared to regular savings at the present time.

Currently, the interest rate for savings deposits with a term of over 12 months at state-owned commercial banks is about 4.7%/year, and at joint-stock commercial banks is about 5%-5.5%/year. Bank bonds and savings deposits are similar because they are essentially lending money to banks and the bank is obliged to pay interest on that amount.

"However, investing in bank bonds requires idle capital for a longer period of time (usually 3-7 years) than regular savings. Buying bank bonds is safer and less risky than other investment channels. If capital is needed, customers can also pledge or mortgage bonds to borrow money to pay back at the issuing bank, so liquidity is still high" - Dr. Dinh The Hien analyzed.

According to Ms. Nguyen Thi Thao Nhu, Senior Director of Individual Clients - Rong Viet Securities Company (VDSC), the interest rates of bank bonds of about 7% - 8%/year may be lower than investing in stocks and real estate but the risks are lower. Bank bonds are often considered a safer investment channel, especially in the context of a volatile financial market due to the stability of the issuing bank and strict control from the management agency.

However, Ms. Nhu noted that when buying bank bonds, investors should prioritize choosing bonds from reputable banks with good financial reports to minimize risks. In addition, it is necessary to carefully consider the bond term to suit the needs of investors. Long-term bonds often have high interest rates but are less flexible.

Ms. Thao Nhu compared: "Bond interest rates are fixed while market interest rates can change. If market interest rates increase, fixed-rate bonds may become less attractive and vice versa. Bonds may be difficult to resell on the secondary market if they need to be resold early, so investors need to consider this risk."

One factor noted by many experts from securities companies is that although bank bonds have a higher level of reliability, investor confidence in the corporate bond market has not recovered after the crisis of the past two years, which may affect the resale ability and market value of bonds.

Analysts from Maybank Securities Company believe that bank bonds have a high level of safety, so interest rates are usually lower than bonds of non-bank groups (groups of enterprises). Interest rates are only one of the factors when evaluating an investment product, besides the possibility of loss, bond term, secondary resale ability, and the payment capacity of the issuer...

Catch the year-end credit wave

The August 2024 corporate bond market report recently released by credit rating agency FiinRatings shows that in the first 7 months of this year, the total value of private corporate bond issuance reached VND178,500 billion, up 57% over the same period last year.

According to FiinRatings, to meet the demand for rapid credit growth since June while not yet increasing charter capital, credit institutions need to continue to consolidate medium- and long-term capital sources over 3 years through bond issuance. The improved absorption rate of bank bond capital will help the corporate bond market become vibrant again.

Source: https://nld.com.vn/trai-phieu-ngan-hang-hap-dan-nha-dau-tu-196240902200922906.htm