The Bank for Investment and Development of Việt Nam (BIDV) has recently issued 10-year and 12 year-bonds worth a total of VNĐ430 billion (US$18.29 million).

The interest rate on 10-year bonds, which totalled VNĐ300 billion, is floating and determined by the reference interest rate (the 12-month saving deposit rate of Agribank, Vietcombank, BIDV and VietinBank) plus 1 per cent.

12-year bonds have a fixed interest rate of 7.7 per cent in the first seven years. After that time, the rate rises to 8.2 per cent providing BIDV doesn’t repurchase the bonds.

These are all non-convertible bonds unsecured by property.

The proceeds will be used to supplement BIDV’s capital and improve its financial capacity.

Increasing capital is one of the most urgent tasks for banks at the moment, especially State-owned banks, because if they cannot do so before 2020, their capital adequacy ratio (CAR) will fall below the minimum level stipulated by the State Bank of Việt Nam (SBV) and under Basel II norms – a set of banking laws and regulations issued by the Basel Committee on banking supervision to enhance competition and transparency in the banking system and make banks more resistant to market changes.

However, raising capital has not been easy as banks are struggling to find foreign investors while they are not allowed to hold on to dividends to increase capital, so some banks have decided to issue bonds.

In July, the Việt Nam Bank for Industry and Trade (VietinBank) also announced that it had successfully issued bonds worth more than VNĐ2.43 trillion, bringing the bank’s total issued bonds to some VNĐ30.92 trillion.

VietinBank’s bond interest rate is floating and determined by the reference interest rate plus 0.8 per cent. These are also non-convertible bonds unsecured by property. — VNS