Corporate bonds are a lifebuoy for VN real estate firms

As commercial banks have tightened real estate credit, realtors are seeking capital from corporate bonds.

Phat Dat Real Estate Development (PDR) has announced the issuance of VND550 billion worth of non-convertible bonds, for the third time this year. If successful, Phat Dat would mobilize VND850 billion from bond issuance.

Corporate bonds are a lifebuoy for VN real estate firms

Other real estate firms, including Novaland, TTC Land and TNR, have also been seeking capital via bond issuance campaigns. Novaland, for instance, has issued VND1.5 trillion worth of bonds, while TTC Land VND470 billion.

Meanwhile, Vingroup is the biggest issuer, offering to sell 20 million non-convertible bonds valued at VND2 trillion.

For a long time, real estate firms have been relying on bank loans to develop projects. However, they cannot do this anymore as the State Bank has set a roadmap on gradually restricting lending to the real estate sector.

The State Bank’s policy has shown its effects: in 2018, credit grew by 12 percent, while the real estate credit grew by 5 percent only, while the fourth quarter of the year witnessed a minus growth rate.

The State Bank’s policy has shown its effects: in 2018, credit grew by 12 percent, while the real estate credit grew by 5 percent only, while the fourth quarter of the year witnessed a minus growth rate.

As the capital flow from banks has stalled, the real estate markets of Hanoi and HCMC have become less busy.

A report found that the real estate supply in Hanoi in Q1 2019 decreased by 25 percent compared with the same period last year. In HCMC, the decrease was 50 percent.

Analysts said they can see clear signs of the two markets freezing and the trend will be seen in other markets as well.

 

Thr deputy chair of the Vietnam Real Estate Association Nguyen Manh Ha said the real estate market bears influences from domestic macroeconomic conditions, the global economic performance and changes in policies related to real estate.

It is expected that real estate credit would be controlled even more tightly as the State Bank is collection opinions for the draft circular to replace Circular 36.

The central bank wants to cut the proportion of short-term capital used for long-term lending to 30 percent and lift the risk coefficient from 50 percent to 150 percent for individual loans for living needs with the principal of VND3 billion or higher.

In such a context, real estate firms have to look for other capital channels, including shares, bonds and cooperation with foreign partners.

According to Rong Viet Securities the average bond yield is stable at 8-10 percent per annum for normal 1-3-year term bonds, far higher than the bank deposit interest rate of 6.6-7.3 percent per annum.

The higher interest rates have attracted many investors, according to Le Hoang Chau, chair of the HCMC Real Estate Association.

Nearly VND38.5 trillion worth of corporate bonds have been issued so far this year.

Kim Chi

Developing bond market can help satisfy demand for capital

Developing bond market can help satisfy demand for capital

Vietnamese enterprises are in dire need of capital to expand production and business, but the current development of the capital market cannot meet this demand. 

VietinBank to issue bonds worth $427.5 million

VietinBank to issue bonds worth $427.5 million

The State Bank of Viet Nam has approved the plan submitted by the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) to issue bonds worth VND10 trillion (US$427.5 million).  

 
 
 
 
 
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