Investors find corporate bonds’ high interest rates attractive

They are attracting increasing interest since they offer higher interest rates than banks, top brokerage SSI Securities Corporation said.

Rates range from 10.1 to 11.2% for bonds with maturities between 12 months and 5 years, or 1.8-4 percentage points higher than deposit rates of big banks.

The four state-owned lenders, Vietcombank, BIDV, Vietinbank and Agribank, recently reduced their 12-month deposit interest rates from 6.5 to 6 percent and private banks zero.4-0.8 percentage points.

Retail investors are showing increasing interest in corporate bonds, buying 22 dong directly.Bonds were worth $7 trillion ($986 million) in the first six months, or 15% of total bonds, compared with 10% last year.They are more interested in bonds issued by car manufacturer VinFast and Masan Group.

Investors can now buy bonds easily through their stock trading accounts and bank accounts.

But the increased interest in the bonds has concerned authorities. The Ministry of Finance has issued several warnings to private investors in recent months on the high interest rates on corporate bonds, saying they could be hurt if the companies run into financial difficulties.

The government is seeking to tighten corporate bond issuance norms after some companies issued bonds worth 50-100 times their equity last year.

The value of corporate bond issuances has increased 25% since 2018 to VND280 trillion ($12 billion) last year, according to SSI.