Pressure to mature quickly, real estate businesses issue bonds with sky-high interest rates

ANTD.VN - Real estate businesses have mobilized about 32,600 billion VND through corporate bonds in the first 7 months of the year, the average interest rate of bonds in this industry group is up to 12%/year, the average term is only about 2.7 years.

According to data from the Vietnam Bond Market Association (VMBA), there were 21 corporate bond issuances last July, with a total value of VND13,612 billion. Since the beginning of the year, the market has recorded 11 public issuances with a total value of VND11,773 billion (accounting for 7.3% of the total issuance value), and 158 private issuances with a total issuance value of VND148,867 billion (accounting for 92.7% of the total).

Of which, the banking group is still the "champion" in bond issuance with a rate of 67.4%; followed by the real estate group with 22.3%.

Real estate businesses still face liquidity difficulties

Previously, according to MBS Securities data, since the beginning of the year, banks are still the group with the highest issuance value with about 96,200 billion VND, an increase of 140% over the same period last year. The average interest rate is about 5.4%/year, term of 4 years. Some banks with the largest issuance value include: Techcombank (17,000 billion VND), ACB (12,700 billion VND), MBBank (8,900 billion VND)...

In 2024, the market is expected to see a number of banks issue corporate bonds. In particular, VietinBank's Board of Directors has approved a plan to issue public bonds in two phases in 2024. These are non-convertible bonds, without warrants, and have collateral with a maximum value of VND 8,000 billion, with a term of 8-10 years.

BIDV Bank plans to issue private bonds this year with a total maximum value of VND3,000 billion, with a term of 5-10 years.

Loc Phat Vietnam Bank (LPBank) has also approved a plan to issue private bonds in the third and fourth quarters of 2024 with a total maximum value of VND 6,000 billion, with terms from 2 to 7 years.

The simultaneous issuance of bonds by banks is believed to be aimed at consolidating medium- and long-term capital sources to meet businesses' borrowing needs.

Despite having a much lower issuance value, real estate is the leading sector in terms of bond interest rates. MBS data shows that real estate businesses have mobilized about VND32,600 billion through corporate bonds. The average interest rate of bonds in this sector is up to 12%/year, and the term is also shorter, only about 2.7 years.

Thus, real estate bond interest rates are more than twice as high as bank bonds, and also twice as high as bank interest rates of the same term.

This shows that real estate businesses are still facing difficulties in capital sources as the market has not yet "unfrozen" and the pressure to mature is mounting.

MBS’s report shows that the rate of late bond payments continues to increase rapidly, as many businesses face a heavy maturity burden. July saw three more businesses announce late principal payments, bringing the total number of late payments to 116 businesses.

Currently, the total value of corporate bonds with delayed payment obligations is estimated at nearly VND210,000 billion, accounting for 21% of the total outstanding debt in the market, of which the real estate group continues to account for the largest proportion, about 68%.

In the remaining months of this year, the total value of bonds due is nearly 131,000 billion VND, more than 41% of which is in the real estate group, followed by banks at 14.6%.

In the coming time, many real estate businesses will continue to plan to raise capital from bonds. IPA Investment Group Corporation (code IPA) is about to issue a maximum of VND 1,096 billion to pay off maturing bonds.

Last June, IPA also successfully issued two bonds with a total mobilized value of VND1,042 billion. Both bonds have an interest rate of 9.5%/year, with a term of 5 years.

Also for the purpose of debt restructuring, it is expected that in the third quarter of this year, Nam Long Investment Corporation (NLG) will issue VND500 billion in bonds. The new bond lot is expected to have a term of 3 years, with the collateral being nearly 34.5 million shares of Southgate Corporation owned by Nam Long.

Source: https://www.anninhthudo.vn/ap-luc-dao-han-don-dap-doanh-nghiep-bat-dong-san-phat-hanh-trai-phieu-lai-suat-cao-chot-vot-post585066.antd