Vietnam bank bond coupons surpass 2022 highs

Vietnamese lenders are paying coupons of more than 9% a year on many new bond issues, with one PVcomBank tranche priced at 10.5%, according to The Investor, citing Hanoi Stock Exchange disclosures.

Issuers paying above 9% include Nam A Bank (NAB), LPBank (LPB), Sacombank (STB), HDBank (HDB) and MBBank (MBB), while Asia Commercial Bank (ACB) also lifted its rate.

Bond funding is getting more expensive just as regulators push banks to charge borrowers less. Credit institutions have been told to lower lending rates by 1.5 to 2 percentage points a year for manufacturing, business and priority sectors, and the State Bank of Vietnam (SBV) issued two directives in four days demanding cuts to deposit and lending rates. S&I Ratings put the average bank bond coupon at 8.85% in the third quarter, above the 2022 high of 8.7% and the first-half average of 8.5%.

PVcomBank's 10.5% bonds, worth VND200bn ($7.73mn), were issued on September 17 and mature in 2036. The lender raised a further VND4.08 trillion at 9.6% across other tranches in September and October. Most of that paper carries floating rates and maturities of seven to 10 years.

Sacombank raised VND7.83 trillion over the same two months at rates between 9.4% and 9.5%. Before that, it sold three six-year batches totalling VND4.23 trillion at a fixed 10%.

Nam A Bank sold VND495bn of bonds at 9.7% and VND100bn at 9.6%. LPBank priced four packages worth VND600bn at 9.68% in late September and early October, though a larger VND1.5 trillion tranche carried 9.2%.

MBBank paid between 9% and 9.2% in September, compared with 8.1% in July. Over the past three months, HDBank moved from 8.9% to 9.2% and ACB from 8% to 8.5%.

State-owned lenders are borrowing more cheaply. Vietcombank has kept its coupons near 8%, while BIDV pays between 8% and 8.2%.

Higher bond costs could squeeze net interest margins if funding expenses grow faster than returns on interest-earning assets. SSI Securities forecasts that the sector's margins will keep narrowing and profit growth will slow in 2027.