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Banks see appeal of corporate bonds

Update: October, 08/2013 - 09:11
With large amounts of money lying idle due to the credit squeeze, banks are increasingly investing in corporate bonds.— Photo vinacorp

HA NOI (VNS)  — With large amounts of money lying idle due to the credit squeeze, banks are increasingly investing in corporate bonds.

As the economy declines, Government bonds and deposits are becoming less attractive, while demand for corporate bonds rises.

In August, coal and mineral group Vinacomin issued VND5 trillion (US$235.8 million) in bonds, 1.7 times more than the expected volume.

At the beginning of this year, the market absorbed VND2.5 trillion ($117.9 million) worth of Vinacomin bonds.

The buyers, mainly commercial banks, doubled Vinacomin's issuance last year, according to the group's general director Nguyen Van Bien.

The group issued only VND3.5 trillion ($165 million) in bonds during the whole 2007-12 period.

Also in August, the Bank for Investment and Development of Viet Nam (BIDV) exceeded its VND3 trillion ($141 million) issuance target by 5 per cent – 60 per cent higher than the VND2 trillion ($94.61 million) decided on when the bank surveyed market demand.

Given these achievements, many enterprises plan further issuances this year.

"Demand for bonds is there, and the market is getting on well," Bien said.

Unlike last year, investors are jumping for corporate bonds with lower interest rates. Vinacomin bonds yielded 14.5 per cent last year; the yield is now 11 per cent.

The total amount of bonds traded in the first nine months reached VND28.1 trillion ($1.3 billion) compared to VND17 trillion ($801.8 million) last year.

After the next three issuances, it could hit VND34 trillion ($1.6 billion). — VNS

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