Real estate firm issues bonds at 13.5% interest

By Phuong Dong February 25, 2023 | 12:32 am PT

An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy

Son Kim Land Investment and Development Corporation has issued VND500 billion (US$21.2 million) worth of bonds with a coupon rate of 13.5%.

It is much higher than last year’s average corporate bond interest rate of 8.05% and 2-3 percentage points higher than the rate offered by real estate companies, according to the Hanoi Stock Exchange.

Holders of the 30-month bonds will be paid interest every six months. This is the second bond issuance in the market this year.

In January the company prematurely redeemed bonds worth VND500 billion it had issued last September at 11.5%.

The issuance comes as a bright spot in the gloomy bond market.

VNDirect Securities Corporation said the confidence of retail investors, who buy a third of all bonds, has plummeted after the recent arrests of people for fraud and other violations in bond issuance and diversion of funds by some major developers like Tan Hoang Minh and Van Thinh Phat.

Bonds worth VND273 trillion are set to mature this year, up 76% from last year, according to VNDirect. The property industry accounts for VND102.57 trillion.

Le Hong Khang, head of credit rating services at Fiin Ratings, said redemption pressure would peak in the third and fourth quarters of this year, and last until next year.