Banks, real estate take the lead in corporate bond issuance

The country recorded 490 corporate bonds issuances in the eight months of 2021

15% of issued real estate bonds secured by shares or without collateral

According to the Vietnam Bond Market Association (VBMA), there were 52 corporate bonds issuances with a total value of VND 26,077 billion including 51 issuances under private placements and one under public offering with a value of nearly VND 2,000 billion by Masan Meatlife JSC.

The banking group still ranked first with total issuance volume of VND10,854 billion, or 41.6% of the total issued value. Of which, there were VND2,324 billion of tier-2 capital-raising bonds issued by BIDV, VietinBank, VIB, MB and VietCapitalBank. Issuing interest rates ranged from 6.1% up to 7.6% per year.

Banks issued large volume such as VPBank (VND2,630 billion), OCB (VND2,000 billion), and SHB (VND1,400 billion). All of which were issued at tenures from 2-4 years with fixed interest rates of 3.5 -4.2% per year.

The real estate group ranked second with a total issued value VND 8,950 billion under private placements. Of which, about 15% of issued bonds are secured by share or without collateral.

Some businesses issued large volume such as: Bong Sen JSC (VND 4,800 billion), Big Gain Investment Co., LTD (VND 1,000 billion). Issuing tenures ranged from 1 to 4 years, and interest rate ranged from 8.2-13% per year.

Some companies issued corporate bonds but finished the issuance in August, such as Helios Investment and Service JSC (VND 3,000 billion, issued on June 23, 2021), Phuoc Long Real Estate Construction Investment Co., LTD (VND 1,050 billion, issued on June 30, 2021), Big Gain Investment Co., LTD (VND 1,000 billion, issued on July 30, 2021), and KN Van Ninh Solar Development and Investment Co., LTD (VND595.2 billion, issued on July 29, 2021).

Banking group takes the lead in issued value

According to VBMA, in the first eight months of 2021, there were 490 domestic corporate bond issuances with a total value of VND 308,517 billion. Of which, there were 476 issuances under private placements with a total issued value of VND 296,933 billion, and 14 issuances under public offerings valued at VND 11,584 billion (accounting for 3.75%) and three issuances to the foreign markets with the total value of US$1 billion.

Commercial banks led with a total issuance value of 116.1 trillion dong. In which, there were VND24,186 billion of tier-2 capital-raising bonds (accounting for 20.8%), 78.3% of bonds issued at tenors from 2-4 years, and low interest rates, ranging from 3-4.2% per year for the entire tenor.

Real estate ranked second with a total issuance volume of nearly VND108 trillion. Of which, about 21.6% of issued bonds were unsecured or secured by shares. Issuing interest rates ranged from 8-13% per year.

In eight months, there were three issuances of bonds to the international market, including: Vingroup (US$500 million), Green bonds of BIM Real Estate JSC (US$200 million) and convertible bonds of Novaland (US$300 million).

VBMA said there will be some notable issuances such as: Investment and Industrial Development JSC (Becamex IDC) plans to issue VND2,500 billion bonds under private placement for the third phase in 2021, Nam Long Investment JSC plans to issue VND500 billion bonds for the first phase and VND450 billion for the second phase at maximum tenure of three years, with expected interest rate of 9.5% in the first year, and a floating interest rate by medium and long term deposit interest rate of Techcombank's corporate customers 3.28% per year and interest payments are made every three months.

Regarding the recent hot development of the corporate bond market, the Ministry of Finance and the State Securities Commission warned of the potential risks.

The Ministry of Finance said in addition to the positive effects of helping businesses raise capital for production and business, the individual corporate bond market also has some risks like some businesses, especially real estate firms, issue bonds at high interest rates with limit ed quality of collateral (mainly investment projects, assets to be formed in the future or shares of real estate enterprises); with the participation of individual investors

The Ministry of Finance told investors that high interest rates are associated with high risks; therefore, investors should carefully evaluate the risks before deciding to buy bonds; and should not buy bonds via invitations of service providers (securities companies, commercial banks) without thorough understanding of the financial situation of the issuer and terms and conditions of the issued bonds.