A view of a Vietcombank’s transaction office in the northern province of Vinh Phuc. Vietcombank repurchased three bond lots ahead of maturity with a total value of 1.3 trillion VND in the last two months of this year. (Photo: VNA) Specifically, the OrientCommercial Joint Stock Bank (OCB) recently bought back all 500 billion VND (20.6million USD) of bonds in circulation before maturity, according to anannouncement from the Hanoi Stock Exchange (HNX). The bond lot, which wasissued on December 15, 2021 with a term of three years and fixed interest rateof 3.2% per year, was a non-convertible bond, had no guarantees and did notinclude warrants.
Previously, OCB bought back all 14 bond lots, which wereissued in 2021 and 2022, ahead of schedule with a total par value of 12.4trillion VND.
At Lien Viet Post CommercialJoint Stock Bank (LPBank), all two bond lots (code: LPBH2124014 andLPH2124015), which were issued in December 2021 with a term of three years,were also settled ahead of schedule. With a face value of 1 billion VND perbond, the total value of the bonds repurchased by LPBank was up to 2 trillionVND.
In addition, LPBank has justreceived notice from HNX about the delisting of bond coded LPB121035. Thereason for cancellation is that the listed bonds are fully redeemed by theissuer before maturity. This is the bond lot worth more than 1.38 trillion VNDthat was issued on December 30, 2021 with a term of seven years.
In July this year, LPBankspent more than 4.1 trillion to buy back four bond lots before maturity.
Similarly, the InternationalCommercial Joint Stock Bank (VIB) also repurchased three bond lots beforematurity with a total value of 1.5 trillion VND. All the three bond lots had aterm of seven years and a face value of 1 billion VND per bond.
Since the beginning of thisyear, VIB has had 17 pre-mature bond buybacks with a total value of up to 6trillion VND.
The Joint Stock CommercialBank for Foreign Trade of Vietnam (Vietcombank) also repurchased 3 bond lotsahead of maturity with a total value of 1.3 trillion VND in the last two monthsof this year.
However, after the buybacks,some above banks have recently announced the successful bond issuance worthtrillions of dong.
In particular, OCBsuccessfully issued 2 trillion VND in the bond lot coded OCBL2326015 onDecember 14 this year.
Similarly, VIB on December 12this year also issued 790 billion VND of VIBL2330005 bonds with an interestrate of 8% per year and seven-year term.
Not only OCB or VIB,Vietcombank also plans to issue 3 trillion VND of bonds via private placements inDecember 2023 with a maximum term of six years and a floating interest rate.
According to financialanalysts, the main motivation for banks to buy back bonds before maturity waslow credit demand amid positive capital mobilisation and abundant liquidity ofthe banking system this year. Therefore, banks found themselves sitting onmountains of cash. In an attempt to reduce capital redundancy and optimisecapital efficiency, banks had little choice but to use their excess money tobuy back bonds.
Dr. Nguyen Huu Huan, head ofthe HCM City Economics University’s Department of Financial Markets, said thebond repurchase seems to be one of the banks’ measures to solve the problem oflow capital disbursement and sluggish loan demand.
Data from the Ministry ofFinance showed as of December 25 this year, the volume of pre-maturitycorporate bond repurchase was 230.2 trillion VND, an increase of 5.8% comparedto the whole year of 2022.
According to Vietnam BondMarket Association (VBMA) data, the total value of issued corporate bonds bythe end of November 2023 was 247.59 trillion VND, including 28 public offeringsworth 27.07 trillion VND and 210 private placements worth 220.52 trillion VND.Of which, the banking industry accounted for the majority with nearly 120.06trillion VND, equivalent to 48.6% of the total issuance value since thebeginning of this year./.
VNA
