Banks, property companies dominate bond issuance

By Dat Nguyen   July 15, 2020 | 06:54 pm PT
Banks, property companies dominate bond issuance
Buildings in District 1, Ho Chi Minh City. Photo by Shutterstock/Efired.
Banks and real estate developers accounted for over 59 percent of the value of corporate bonds issued in Vietnam in the first six months.

At nearly VND45.6 trillion ($2 billion), the real estate firms accounted for 29.16 percent of total corporate bond issuance, up from 19.25 percent in 2019, according to the Hanoi Stock Exchange (HNX).

Leading real estate firm Vinhomes issued VND12 trillion ($520 million) worth of bonds, followed by Sovico with VND10 trillion ($434 million) and TNR Holdings with VND9.7 trillion ($421 million).

Banks accounted for 30.29 percent of bond issuance value, with BIDV at VND15 trillion ($650 million), followed by HDBank at VND8.5 trillion ($369 million) and VPBank at VND7 trillion ($303 million).

Bond issuance in the first six months on the Hanoi Stock Exchange (HNX) reached VND156.3 trillion ($6.8 billion), 53 percent of last year’s value. HNX did not mention figures for the first six months last year.

Analysts from brokerage SSI Securities Corporation said that investors are being drawn towards bonds as they offer higher interest rates than banks.

The rates range from 10.1 to 11.2 percent for bonds with maturity of 12 months to five years, or 1.8-4 percentage points higher than deposit interest rates offered by major banks.

However, the government has recently made moves to tighten bond issuance amid concerns that companies will not be able to repay their debts.

A new decree limits companies to no more than two bond issuances a year, and the issuance value must not exceed five times a company’s equity.

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