Real estate businesses mobilise capital at high interest rates

12-Jul-2019 Intellasia | VnEconomy | 6:02 AM Print This Post

The updated report of MB Securities Joint Stock Company (MBS) showed that from the beginning of the year, 69.747 trillion dong have been mobilised via corporate bonds.

In particular, real estate, construction and infrastructure sector rank the second in bond issuance value with 19.7 trillion dong, accounting for 28.3 percent of the total corporate bonds issued since the beginning of the year.

Real estate business and construction sectors, which often have a high borrowing ratio, are looking for other capital mobilisation channel such as issuing corporate bonds, as in the near future, the State Bank of Vietnam (SBV) will tighten the bank credit for real estate loans, through the regulation of gradually reducing the ratio of using short-term funds for medium and long-term loans of credit institutions from 45 percent to 30 percent in 2021 2022.

Thus, real estate sector is boosting the capital mobilisation through corporate bonds with the highest coupon interest rates, popular reaching over 10 percent per annum.

Offering the highest interest rate in the sector is Phat Dat Corporation Real estate Development (PDR). In the first six months of the year, PDR carried out three bond issuances, of which the issuance of 200 billion dong of one-year bonds in March recorded interest rate of up to 14.5 percent; while two other issuances were May, with respectively 100 billion dong of one-year bonds at interest rate of 12 percent and 550 billion dong of five-year bonds at interest rate of 10.5 percent.

Not only PDR, many other businesses accept to pay 12 percent per annum interest rate to mobilise capital via bond channel, such as Van PhuInvest Investment Joint Stock Company (VPI) and Khang Dien House Trading and Investment Joint Stock Company (KDH).

While VPI made one issuance in May 2019 with interest rate of 12 percent per annum, KDH in May mobilised capital through two issuances of two-year bonds with a total value of more than 900 billion dong, interest rate is 12 percent per annum.

Recently, Dat Xanh Group Joint Stock Company (DXG) approved the plan to issue a maximum of 400 billion dong of bonds at interest rates not exceeding 12 percent per annum.

Bondholders are banks

Although the bond channel has been promoted with the aim to reduce the dependence on bank loans, in many corporate bond issuance, banks turned up and purchased the whole batch.

Typically, in the bond issuance of 740 billion dong on seven-year term of Ba Na Service Cable Car Joint Stock Company (BNC) in late June 2019, Vietnam Technological and Commercial Joint Stock Bank purchased the whole ask volume. Previously, on May 29th, BNC also issued 600 billion dong of seven-year bonds and interest rates of 10.3 percent.

For real estate businesses, the 800 billion dong of bonds issued by VPI on May 9th were fully acquired by Vietnam Prosperity Commercial Joint Stock Bank (VPBank). The interest rate of these bonds is 12 percent per annum.

Previously, VPI also received a guarantee from VPBank with a maximum of 500 billion dong in order to guarantee investors’ financial obligations to customers, involving the process of handling over the low-rise housing section of the complex of commercial centre, services, high-end apartments and low-rise apartments in An Hung new urban area, La Khe and An Duong wards, Ha Dong district.

In another group of businesses, HN Trading, Investment and Production Joint Stock Company emerged with the issuance of bonds with interest rate of 11.75 percent, at a total value of 600 billion dong on 42-month term. These bonds were wholly purchased by Vietnam Public Joint Stock Commercial Bank (PVComBank) after being issued in May 2019.


Category: Finance, Vietnam

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