Agricultural group Hoang Anh Gia Lai Joint Stock Company has issued bonds worth VND930 billion (US$41.3 million) to a financial institution, it said in a filing to the HCM Stock Exchange.

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The company, however, has not revealed the name of its institutional investor.

The bonds were issued on December 29, 2016, and will mature in seven years. Its yield rate is not known.

After the first nine months of 2016, Hoang Anh Gia Lai earned a combined revenue of VND4.91 trillion. It suffered a post-tax loss of VND1.27 trillion, resulting in the parent company posting a net loss of VND896 billion. The group’s shareholders had targeted a revenue of VND5.83 trillion and a post-tax loss of VND1.2 trillion for the whole year.

As per the company’s financial report on performance in the first nine months of 2016, the loss was a result of the decline in rubber and palm oil prices, which affected the company’s revenue.

Palm oil on the Chicago Mercantile Exchange fell to under $485 per tonne in September 2015, after peaking at $1,250 per tonne in February 2011. The sharp drop hit Hoang Anh Gia Lai, which owns 30,000 hectares of palm tree to produce oil.

Rubber rates on the Tokyo Commodity Exchange hit a five-year low of 147 Japanese yen per kilogramme in mid-February 2016, after sliding from a peak of around 500 yen per kg in February 2011.

However, the situation will likely improve for Hoang Anh Gia Lai in the near future as rubber and palm oil prices have shown signs of rising again. After its drop in early 2016, rubber prices almost doubled from its five-year low to close at 283.4 Japanese yen per tonne in December, while palm oil closed in November 2016 at $670 per tonne, a 39 per cent increase from September 2015.

Analysts believe that rubber and palm oil prices will continue to recover because of the rising demand from China and the rebound of crude prices. 

VNS