Acording to the data from Viet Dragon Securities Corporation (VDSC) about the debit balance corporate bonds of 10 banks (excluding the bonds issued by credit institutions), in 2018, the debit balance bonds of economic organisations reached 149.4 trillion dong, slightly reducing by 0.8 percent compared to the end of 2017, accounting for 4.0 percent of banks’s total credit.
Notably, in addition to the strong increase in corporate bonds, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) has gradually spread to some other banks.
In the first six months of 2019, total debit balance corporate bonds at these 10 banks reached 152.3 trillion dong, rising two percent compared to the beginning of the year, lower than the average credit growth of 10 banks (8.1 percent YTD).
Debit balance bonds of economic organisations did not change much in most banks. However, only two banks had sharp investment expansion in economic organisation bonds: Military Commercial Joint Stock Bank (MBBank) (+ 78.7 percent), and Tien Phong Commercial Joint Stock Bank (TPBank) (+ 25.3 percent)these were also two of the three banks having the strongest credit growth in the first half of 2019 (respectively 13.9 percent and 15.9 percent, after Vietnam International Commercial Joint Stock Bank (VIB)).
Thus, until 2019 June, nearly all banks having a moderate proportion of economic organisations bonds were around two percent to four percent of credit balance. The two banks having the lowest proportion were Asia Commercial Joint Stock Bank (ACB) (without debit balance of economic organisation bonds) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) (1.1 percent of credit).
The three banks with the largest proportion of investment in corporate bonds were Techcombank ( 60.7 trillion dong, accounting for 24.7 percent of outstanding loans), MBBank (15.6 trillion dong, accounting for 6.1 percent of outstanding loans) and TPBank (6.4 trillion dong, accounting for 6.7 percent of outstanding loans).
In the first half, Techcombank bought over 2 trillion dong of bonds of Tan Lien Phat Sai Gon Business Real Estate Company Limited. MBBank and Vietnam Maritime JointStock Commercial Bank (MSB) also bought 200 billion dong of Novaland bonds in May, and 550 billion dong of bonds issued by Phat Dat Real Estate in June. Therefore, in the list of corporate bonds of these banks, it is most likely to have more bonds related to the real estate sector.
VDSC said, with common interest rates at nine percent per year or more (even higher for companies in the real estate sector), corporate bond yields were usually better than bonds issued by credit institution. (interest rate about six percent to eight percent).
Therefore, the two banks with the highest proportion of debt stock investment in corporate bonds also had a much higher rate of interest in debt stock investment than the common level (Techcombank 8.1 percent per year, TPBank 7.9 percent per year). On the contrary, it is easy to realise that banks such as ACB and Vietcombank had safer debt securities investment structure than other banks and also lower debt securities yields (less than six percent).
In addition, the trend of underwriting bonds via securities companies and then redistributing them to individual investors is also becoming common. For Techcombank, most of corporate bonds were invested through Techcombank Securities Joint Stock Company (TCBS), after which TCBS would split and resell to retail customers. Similarly, MBBank is also aiming to distribute bonds (G-bond products).
After the bank resells, the risk will be passed on to secondary buyers. For this operation, the bank collected bond issuance advisory fee and bond distribution fee (for resale to individual customers).
