VietNamNet Bridge - Analysts estimate that the corporate bond market will grow by rate of 30-40 percent per annum. Anticipating tighter capital flow from banks, businesses are issuing bonds to mobilize capital. 

REE has issued VND2.32 trillion worth of bonds

The Refrigeration Engineering Enterprise (REE), for example, has issued VND2.32 trillion worth of 10-year bonds, for the expansion of investment in housing and office real estate market.

The bond issuance has attracted many investors, especially foreigners. The volume of shares registered to buy has exceeded the total shares offered.

Analysts say that REE bonds attracted investors because of the hot real estate market. In addition, the guarantee of Credit Guarantee & Investment Facility (CGIF) of the Asian Development Bank also helped raise investors’ confidence.

For a long period, the Vietnamese bond market has been understood as the government bond market because of the modest trading volume of corporate bond transactions. However, this changed with the successful issuance deals in 2018.

Hoan My Medical Group last year raised VND2.3 trillion worth of funds in dong. With interest rates of 6.64 percent for 5-year bonds and 6.74 percent for 7-year bonds, Hoan My’s capital mobilization cost through bond issuance was lower than bank loans (10-11 percent).

The other corporate bond issuance deals included Pan Group’s VND1.135 trillion, Vingroup’s VND2 trillion and Vinhome’s VND7 trillion.

Novaland raised $160 million worth of funds by issuing convertible bonds listed on Singaporean bourse. The bonds are expected to mature by 2023 which would be converted into shares with the starting price of VND74.75, or 15 percent higher than the share reference price on the issuance day.

The bond issuance campaigns have led to many more jobs at consultancy firms. Techcombank Securities was the biggest service provider last year, with 40 percent of market share.

The corporate bond market is still modest compared with demand. The total amount of bonds issued as of 2018 was 40 percent of GDP. Of this, government bonds made up 30 percent of GDP, while corporate bonds were 6 percent.

Experts believe the bond market will continue to grow because of demand from both issuers and investors. Vietnam dong corporate bonds attract foreign investors as well, thanks to the dong stability and controlled inflation.

Sunshine Group plans to issue VND2.2 trillion worth of bonds this year and the value could be up to VND10 trillion if the conditions are favorable. Dat Xanh Group plans to issue VND1.4 trillion worth of 5-year convertible bonds.

US$1=VND23,000

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