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Real estate developers remain largest bond issuers

Real estate developers remain largest bond issuers

Real estate companies issued approximately $1 billion worth of bonds, accounting for 62 percent of the total market issuance, in Q1. – VnExpress International

Real estate developers remain largest bond issuers

Modern apartment buildings in Binh Thanh District, Ho Chi Minh City. Photo by Shutterstock/TommyTeo.

According to leading brokerage SSI Securities Corporation, the total issued volume of corporate bonds was VND37.4 trillion (over $1.6 billion) in Q1, down nearly 24 percent year-on-year. Sixty-two percent came from real estate developers at an amount of VND23.15 trillion (nearly $1 billion) issued, a year-on-year decrease of 5 percent.

Issuance volume by securities companies and non-bank financial institutions accounted for 6.8 percent, energy and mineral enterprises (4.5 percent), commercial banks (3.3 percent) and infrastructure development enterprises (3.1 percent).

Average maturity of real estate bonds issued in Q1 fell sharply to 2.9 years, from the average 3.9 years in 2019 and 2020. Their average interest rate reached 10.41 percent per year, the highest rate on the market. Banking has the lowest average interest rate, at only 4.67 percent per year.

There are VND3.4 trillion (nearly $147 million) of corporate bonds, accounting for 9.2 percent, with collateral entirely of stocks, including bonds of PDR of Phat Dat Real Estate Development, KDC of packaged food producer Kido Group, KBC of industrial real estate developer Kinh Bac City Development Holding Corporation,, APH of plastic producer An Phat Holdings, and DXG of property developer Dat Xanh Group.

Affected by regulations on investment conditions for privately issued bonds, individual investors only bought VND1.53 trillion worth of corporate bonds on the primary market in Q1, equalling 16 percent that of the same period last year.

The Vietnamese government has recently issued a decree that effectively limits companies to no more than two bond issuances a year, after the Ministry of Finance issued warnings about the potential risks of investing in bonds and telling retail investors “not to purchase bonds just because of high interest rates.”

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