VN banks, securities firms step up bond purchases
A recent study by SSI Securities Corporation found that banks and securities companies acquired a large volume of bonds in the January-August period of this year.
|A bank employee handles banknotes. Local banks and securities firms strongly acquired bonds between January and August this year|
During the period, some VND129 trillion worth of corporate bonds was offered, of which bonds worth over VND117 trillion (90.8%) were successfully issued. The local bond market accounted for some 10.2% of the nation’s gross domestic product.
Regarding domestic buyers, securities enterprises were active bond buyers, acquiring some VND29.4 trillion, or 25.4% of the issuance volume. Of the figure, they purchased VND22.9 trillion worth of bonds issued by commercial banks and picked VND3.2 trillion worth of real estate bonds.
According to SSI, the realty bond volume was high compared with the size of the property firms.
In fact, the securities companies had to issue bonds to spur capital. So they might not be the final buyers of realty bonds as they bought the papers on the primary market to resell them on the secondary market.
Meanwhile, local banks purchased VND7.4 trillion worth of real estate bonds and over VND3.7 trillion worth of bonds in other sectors. According to the account balances of 18 listed banks, they held nearly VND230.5 trillion worth of bonds at the end of the second quarter of this year, up by VND65 trillion versus the end of 2018. Techcombank remained the largest bondholder, with bonds worth VND60.6 trillion.
As securities enterprises are key buyers, banks likely cross-owned their bonds, aiming to improve mobilization and the ratios of medium- and long-term capital to meet the requirements of the State Bank of Vietnam.
Foreigners were active on the bond market, net buying over VND13 trillion worth of government bonds. They also purchased over VND10.2 trillion worth of corporate bonds on the primary market, making up 8.8% of the issuance volume.
According to the report, commercial banks remained the key issuers, offering some VND56 trillion worth of bonds, or 47.9% of the issuance volume, followed by real estate firms with VND36.9 trillion (31.5%), infrastructure developers with VND9.2 trillion (7.9%) and non-bank institutions with VND4.4 trillion (3.8%). Among real estate firms, up to 44 companies offered VND47.8 trillion worth of bonds, but investors purchased only VND36.1 trillion worth of bonds.
Most banks provided fixed annual yields, staying at some 6.75% per year over 3.3 years. Meanwhile, real estate firms applied an average rate of 10.01% per year. SGT