Major bond issuers in real estate and banking industries

30-Oct-2020 Intellasia | Dien dan Doanh nghiep | 6:02 AM Print This Post

Real estate and banking industries continued to be the two leading issuers of primary bonds in the first nine months of 2020.

As expected, before Decree 81/2020/ND-CP official took effect September 1st 2020, the primary corporate bond market sharply grew in July and August.

According to Saigon Securities Incorporation (SSI) Research, the volume of bonds issued by real estate businesses in the third quarter (Q3) of 2020 alone was nearly 63 trillion dong, focusing on July and August 2020, equivalent to 44 percent of the total corporate bonds that real estate businesses issued in the first nine months of 2020. Some businesses with the largest issuance volume in Q3 2020 included Quang Thuan Investment Joint Stock Company (9.450 trillion dong through 89 issuances), Novaland (7.017 trillion dong through 21 issuances), Thien Phuc International Hotel Company Limited (6.450 trillion dong through 47 issuances), American Property Joint Stock Company (2.364 trillion dong through 51 issuances), etc. SSI stated that Phu My Hung Development Company Limited issued 75 million US dollars of international bonds in September. In October, the company continued to issue 80 million US dollars of bonds listed on the Taipei Stock Exchange (Taiwan).

Overall, in the first three quarters of 2020, 88 real estate businesses issued a total of 137.5 billion dong of bonds, including only 16 listed companies with issuance value of 26.7 trillion dong, and 72 unlisted companies with issuance value of 110.8 trillion dong (equivalent to 80.6%).

Real estate company that issued such large volume of international bonds like Phu My Hung at the present time can be considered very rare. That also shows the advantages of joint ventures with foreign capital in the process of arranging capital to attract capital from external markets.

For the banking industry, Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Southeast Asia Commercial Joint Stock Bank (ACB) and Tien Phong Commercial Joint Stock Bank (TPBank) issued more than 36 trillion dong of bonds with terms of more than five years to increase Tier-2 capital, five percent higher than the total bond issuance to increase Tier-2 capital of the whole year 2019, and accounting for 37.7 percent of the total bonds issued by banks in the first nine months of 2020. According to the SBV, the Capital Adequacy Ratio (CAR) of groups of commercial banks according to Basel II standard application as of late August 2020 was 11.67%, higher than the 11.3 percent recorded in January 2020, in which the CAR of state-owned banks was 9.71 percent and of private joint stock banks was 10.75%.

The 36 trillion dong capital mobilisation of banks did not include the recent large mobilisations through bond channel of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) and HCM City Development Commercial Joint Stock Bank (HDBank). If in 2019, VPBank was successful in mobilising international syndication of 300 million US dollars, HDBank this year also managed to issue large-value convertible bonds with development finance institution DEG of German state-owned development Bank. According to market announcement, this organisation purchased HDB shares of HDBank at a higher price than the market price. It shows that banking’s credit rating is still highly appreciated by international investors and it is much easier for banks to mobilise capital in bonds than for other organisations.

According to SSI, with the cooling down of primary corporate bonds after September 1st, businesses that need to raise capital will return to credit channel. The credit growth in the first three quarters of 2020 was only 6.09 percent compared to the end of 2019. The SBV expects the credit growth for the whole year 2020 at eight to 10%, which means that there will be about 150 320 trillion dong of additional credit in the last quarter of 2020.

In fact, with the regulations on private issuance of bonds, not many businesses can meet the regulation on not having accumulated losses, ensuring the time of the next issuance to be not too close to the previous completed issuance. The regulations on issuance documents and information disclosure are also stricter for private bond issuance, and the implementation steps are more time-consuming, requiring units to consider more carefully before issuing.

Nevertheless, there is a question on whether businesses can return and unfreeze the credit flows. It is because even if interest rates are currently low, it is unknown if banks will lower their borrowing conditions, and if so, to which organisations and to what level.


Category: Finance, Vietnam

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