De­vel­op­ers move to raise cap­i­tal via bond is­suance

Viet Nam News - - PROP­ERTY -

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

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