Bank bonds issued increase strongly again

09/04/2023 14:34 Nhat Linh Print article

ANTD.VN - Along with the move to buy back bonds before maturity, many banks have also stepped up new issuances in recent months.

According to statistics, in August 2023, there were 20 corporate bond issuances with a total issuance value of more than VND 22,000 billion, a sharp increase compared to July (up more than 70%). The surge in bond issuance was mainly due to banks aggressively issuing bonds again.

Specifically, in the month, there were 10 bond issuances by banks with a value of more than VND 12,000 billion, accounting for 56%. Of which, ACB Bank had 3 issuances with a total value of VND 6,500 billion, MSB issued VND 1,000 billion, OCB VND 2,000 billion, BacABank VND 800 billion, BIDV VND 700 billion...

In addition, HDBank's Board of Directors has just approved a plan to issue to the public a maximum of VND5,000 billion in non-convertible bonds, without warrants, without collateral, with a term of 7 years. The bonds are issued to supplement Tier 2 capital, improve capital safety ratios and serve customers' borrowing needs.

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Banks have been stepping up bond issuance in recent months.

Thus, it can be seen that banks have actively promoted bond issuance in the past 2 months after a period of almost "freezing" during the first half of this year.

The reason for the resurgence of bank bonds may be due to the removal of audit issues. Previously, in the first half of this year, many auditing units refused to confirm the use of bonds by banks, causing new issuance to be stuck.

Specifically, according to the provisions of Decree 65/2022/ND-CP, all privately issued enterprises must periodically disclose information every 6 months and annually on the situation of using outstanding bond capital controlled by a qualified auditing organization.

However, according to banks, in reality, the amount of money that banks mobilize from bonds and other sources (residential deposits, deposit certificates, etc.) is merged into one, so it will be difficult for auditors to determine which specific investment the bond issuance money is used for.

However, this difficulty has now been resolved, and some banks have had their capital use reports confirmed by the auditing unit.

On the other hand, some banks have also stepped up the purchase of bonds before maturity to restructure their capital sources. In August alone, 6 banks conducted 10 purchases of bonds before maturity, with a total value of more than VND6,600 billion, according to the announcement of HNX (as of August 30).

The trend of banks buying back bonds before maturity has been going on continuously for many months. Since the beginning of the year, banks have bought back over VND80,000 billion worth of bonds before maturity.

The reason why banks are racing to buy back bonds before maturity is because they have excess liquidity when they cannot boost credit growth. Meanwhile, previously issued bonds often have high interest rates, so buying back bonds before maturity is also a way for banks to restructure bond terms and interest rates, reduce excess capital, improve capital efficiency, and improve capital adequacy ratio (CAR).

It is not excluded that banks will buy back bonds with a term of less than 5 years to create room to issue new bonds with a term of more than 5 years (eligible for Tier 2 capital). This is also reasonable in the context that from October 1, 2023, the short-term capital ratio for medium and long-term loans will be reduced from 34% to 30%.

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