In the past two months, the market has recorded 91 enterprises offering bonds and announcing them on the Hanoi Stock Exchange (HNX). Of these, 16 units offered interest rates of 10% or more for a total mobilized capital of more than VND14,600 billion. Most of them are real estate enterprises or have business lines related to real estate business.
14% per year is the highest interest rate offered by Anh Quan Construction Consulting and Services Co., Ltd. The Hanoi-based real estate company raised VND1,495 billion with bonds that will mature in November 2028.
Following is the interest rate of 13.5% per year that Khai Hoan Land used to issue a bond lot of 240 billion VND. Lower is the rate of 12.5% per year for the bond lots of Saigon Capital and Trung Minh New Urban Area Company Limited. While Trung Minh New Urban Area used the above interest rate to mobilize 300 billion VND, Saigon Capital applied it to three bond lots with a total face value of 3,000 billion VND.
The interest rate of 10-14% per year for the above bond lots is about 2-3 times higher than the average interest rate for bank deposits. According to a survey by VnExpress, banks currently pay interest of 5-6% per year for 12-month savings, and some units even lower.
In a recent report, MB Securities (MBS) reported that the average corporate bond interest rate in the first 11 months of this year reached 8.5% per year, higher than the average of 7.9% in 2022. The real estate group alone offered an average interest rate of up to 9.7% per year.
In November alone, this figure for the real estate group reached 12% per year, an increase over the past two months. Real estate corporate bonds have led in terms of profit margin for four consecutive months. The securities group follows with an average interest rate of 9.3% per year. Banks are third with 7% per year, an increase after many months of flat growth.
The real estate group leads the way in paying high interest rates when raising capital through bonds. However, recently, many real estate businesses have continuously delayed paying interest and principal to bondholders, and a wave of debt deferral requests has been taking place vigorously.
A recent report by credit rating agency VIS Rating also stated that the debt repayment capacity of most real estate companies continues to decline due to high leverage and weak cash flow when business prospects are not optimistic. Total debt of listed real estate companies decreased by 16% in the first 9 months of the year. However, the debt to earnings before tax, depreciation and interest (EBITDA) ratio continued to increase due to weak revenue and profit, leading to a 44% decrease in EBITDA. At the same time, operating cash flow continued to decrease in the 9 months due to declining sales and rising inventories.
VIS Rating noted that the total cash resources of real estate companies have fallen to a five-year low. The large amount of bonds maturing each year in 2023-2024, about VND114 trillion, will also increase refinancing risks.
Source vnexpress
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