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Real estate businesses race to issue bonds

Avatar of Nick John By Nick John Dec11,2023 #businesses #Real
Real estate businesses race to issue bonds 4
Real estate businesses race to issue bonds 4

During the first half of 2019 – the second half of 2018, the race to issue bonds by real estate businesses attracted attention not only with a large issuance volume but also with interest rates pushed up very high.

In May, Van Phu Investment Joint Stock Company (stock code VPI) successfully issued 8,000 bonds with a total value of 800 billion VND (par value of 100 million VND per bond).

A real estate group headquartered in District 1, Ho Chi Minh City also informed investors about its plan to issue 1,300 individual bonds with a face value of one billion VND per bond in June 2019.

If we take 2018 as a milestone, the need to issue long-term bonds of real estate businesses has begun, creating extremely strong underground waves.

Real estate market in the East of Ho Chi Minh City.

Saigon Thuong Tin Real Estate Joint Stock Company (TTC Land) privately issues a maximum of VND 470 billion in non-convertible bonds, without warrants, with guarantees.

In August 2018, a northern real estate giant (listed on Ho Chi Minh City floor) issued 20 million 3-year bonds (from August 2, 2018 to August 2, 2021), total value of 2,000 VND.

Sunshine Group Joint Stock Company also issued 100 million bonds, par value of 100,000 VND per bond, equivalent to a total value of 10,000 billion VND.

In an official dispatch reporting the difficulties and risks of the Ho Chi Minh City real estate market in the first 6 months of 2019, the Ho Chi Minh City Real Estate Association (HoREA) assessed the wave of bond issuance by real estate businesses as

The association said that the State Bank is implementing a roadmap to gradually limit credit into the real estate market, leading to businesses having difficulty finding alternative sources of capital.

HoREA cited reports from securities companies that in the first 5 months of 2019, real estate, construction, and infrastructure enterprises issued corporate bonds with a value of up to 16,230 billion VND, accounting for 27%

General Director of Viet An Hoa Real Estate Investment Joint Stock Company, Tran Khanh Quang, said that there are 4 main reasons that have fueled the wave of bond issuance by real estate and infrastructure enterprises in recent times with interest rates.

Firstly, banks limit real estate lending, so bonds are currently the optimal alternative capital mobilization channel for businesses wishing to develop projects.

Second, bonds have the most common term of 2-3 years or more, (very few types have a term of 1 year), this is a quite safe time period for the life cycle of a project, ensuring revenue.

Third, the common feature of bond issuances in the past 6-12 months is that due to long-term mobilization, businesses accept high interest rates.

Fourth, real estate businesses are tending to develop urban-scale projects.

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