Developers move to raise capital via bond issuance
HAØ NOÄI — Property developers were eyeing issuing bonds as a measure to raise capital amid tightened banking credit for the real estate sector.
The State Bank of Vieät Nam asked commercial banks to keep the ratio of short-term deposits used for medium- and long-term loans below 40 per cent from the beginning of 2019, down from 45 per cent in 2018.
As medium– and long-term loans are important sources of capital for property developers, the regulation forced them to look to other channels for raising capital, making corporate bond issuance an attractive option.
In December, developer Vingroup announced it was issuing 20 million non- convertible bonds worth a total of VNÑ2 trillion (US$87 million). A member of Vingroup, Vinhomes, in August issued 20 million three- year bonds worth VNÑ2 trillion and another VNÑ5 trillion worth of two-year bonds.
Sunshine Group recently announced it was issuing 100 million bonds of three-year terms at the face value of VNÑ100,000 each to increase capital and implement its investment projects.
Ñaát Xanh Group also plans to issue 1,400 convertible bonds of five-year terms at the face value of VNÑ1 billion each in the first quarter or the second quarter of this year.
Other developers such as Novaland, Haûi Phaùt Invest, TTC Land, Nam Long Group and Vaên Phuù Invest also raised millions of dollars by issuing corporate bonds.
According to expert Ñinh Theá Hieån, as banking credit was being tightened, property developers would pay more attention to issuing bonds as an alternative channel to raise capital.
Hieån stressed the prestige of developers was critical to gain the trust of investors and ensure the success of bond issuances.
Caán Vaên Löïc, chief economist of the Bank for Investment and Development of Vieät Nam, however, said it was not always easy to issue bonds successfully. For a successful bond issuance, companies must have transparency and be in a stable business situation, he said.
Löïc said issuing bonds or shares to raise capital would likely become a trend for property developers, urging them to strategically take advantage of it.
According to data from Saøi Goøn Securities Incorporation Research, real estate was among the sectors with a high value of bond issuance. Statistics showed the value of bond issuance of real estate companies accounted for more than 21 per cent of the total issuance value, following only the banking sector.
The Government has also issued a decree which will come into effect from the beginning of February to loosen regulations for corporate bond issuance. Firms will no longer need to have a profit report from the previous year in order to be eligible to issue bonds. Instead, they can use audited financial reports.
In addition, firms will be permitted to buy back bonds before their maturity or convert bonds to restructure debts. — VNS