The name is bonds: property developers swagger back into market

By Tat Dat   December 4, 2023 | 05:11 am PT
The name is bonds: property developers swagger back into market
Vietnamese banknotes seen at a bank in Hanoi. Photo by VnExpress/Giang Huy
Businesses, mostly property developers, are relying on bonds to fund their projects once again by offering interest of up to 14%, triple the rates on bank deposits.

In the last two months 16 out of 91 companies making issuances – worth VND14.6 trillion (US$602.37 million) -- have offered rates of 10-14%, according to the Hanoi Stock Exchange.

The highest rate of 14% was offered by Hanoi property developer Anh Quan Construction Consultancy and Services.

It issued bonds worth VND1.5 trillion maturing in November 2028.

Another developer, Khai Hoan Land in Ho Chi Minh City, offered 13.5% on its VND240 billion bond.

Five others offered around 12%.

Meanwhile, bank deposit interest rates have plummeted to 5-6% for 12-month terms.

The average bond interest rate this year is 8.5%, up from 7.9% last year. Property developers’ average offer has been 9.7%.

However, many developers have been struggling to redeem their bonds in recent months due to a lack of income, with some negotiating with bondholders to roll them over.

Rating firm VIS Rating said property developers’ cash flows have dropped to a five-year low.

Bonds worth an estimated VND114 trillion will mature again next year, the same as this year, posing a major challenge to issuers.

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