VietNamNet Bridge – Since it’s very difficult to access bank loans at this moment, a lot of businesses issue corporate bonds at high interest rates, or issue convertible shares to restructure their debts or develop their projects.

Though it’s is a difficult task to issue corporate bonds in Vietnam due to the lack of the transparency of businesses – issuers. However, enterprises still rush to issue bonds to call for more capital, because they have no other choice.

Hoang Anh Gia Lai (HAG) successfully issued 850 billion dong worth of bonds on August 17. The money raised from the issuance would be used by the conglomerate of Doan Nguyen Duc, one of the Vietnamese richest stock millionaires, to restructure their bank debts.

Each of the 3-year bonds has the face value of 1 billion dong and the interest rate at 16 percent per annum for the first year. The interest rates of the next two years would be calculated by the 12-month term average deposit interest rate of four banks in Gia Lai province plus five percent per annum. The four banks are Vietcombank, Vietinbank, BIDV and Agribank.

HAG would pay interests to bond holders once in every six months.

It’s obvious that the interest rate offered by HAG is much higher than the average bank deposit interest rates, at 9-14 percent per annum.

An executive of HAG said the bond issuance does not aim to mobilize more capital, but just to convert the short term bank debts of the group into corporate bonds. The solution would help Hoang Anh Gia Lai extend the debt payment deadline and improve the finance situation of the enterprise.

Hoa Phat Group is also planning to issue 1 trillion dong worth of 3-year bonds with the fixed interest rate of 14.5 percent for the first year, and the floating interest rates for the next two years. The interest rates for the second and third years would be calculated by the 12 month term deposit interest rate plus 3.8 percent.

The bond issuance aims to arrange capital to develop Mandarin Garden, a real estate project which is under the construction.

Meanwhile, some other businesses have decided to borrow convertible bonds in order to raise the attractiveness of the bonds.

In a recent announcement, the Lam Son Sugar Company LSS said it has offered 1.5 million convertible bonds to the existing shareholders at the ratio of 100:3, which means that investors can buy three bonds for every 100 stocks they hold.

The 2-year bond has the face value of 100,000 dong, which would become matured on October 10, 2014, by that time. All the bonds would turn into shares at the ratio of 1:10 (one bond would be converted into 10 shares).

Gemadept, a shipping firm, has completed the issuance of convertible 5-year bonds worth 40 million dollars to the Vietnam Investment Fund II at the fixed interest rate of six percent per annum. GMD bonds can be converted into shares one year after the issuance day – August 15, 2012.

Earlier this year, the shareholders’ meeting decided that GMD would issue 30-70 million dollars worth of convertible bonds in 2012 to raise funds for the investment projects, including the Nam Hai-Dinh Vu port (15 million dollars), logistics service development (5.3 million dollars), the afforestation project in Cambodia (14.5 million dollars).

The shareholders of TMS, a freight and forwarding company have also decided to issue 1 million 2-year convertible bonds.

1US$ = VND20,800

Manh Ha