Real estate developers remain largest bond issuers
In this article (5)
Real estate companies issued approximately $1 billion worth of bonds, accounting for 62 percent of the total market issuance, in Q1.
According to leading brokerage firm SSI Securities Corporation, the total volume of corporate bonds issued in Q1 was VND37.4 trillion (over $1.6 billion), down nearly 24 percent year-on-year. Sixty-two percent, or VND23.15 trillion (nearly $1 billion), of this were issued by real estate developers, a year-on-year decrease of 5 percent.
The proportion of bonds issued by other sectors was much lower: 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).
The average maturity of real estate bonds issued in Q1 fell sharply to 2.9 years from 3.9 years in 2019 and 2020. Their average interest rate was 10.41 percent per year, the highest rate in the market. The banking sector had the lowest average interest rate at just 4.67 percent per year.
Corporate bonds accounted for 9.2 percent of the total at VND3.4 trillion (nearly $147 million), with their collateral comprised entirely of stocks. These included 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, just 16 percent of the same period last year.
The Vietnamese government recently issued a decree that limits companies to no more than two bond issuances a year. The decree followed the Ministry of Finance issuing warnings about the potential risks of investing in bonds and telling retail investors “not to purchase bonds just because of high-interest rates.”
Questions & Answers
Q.What proportion of all bonds issued in Q1 came from real estate companies?
What proportion of all bonds issued in Q1 came from real estate companies?
Real estate companies were responsible for 62 percent of the total market issuance in Q1. This amounted to VND23.15 trillion, which is nearly $1 billion of bonds issued by the sector.
Q.How did the total volume of corporate bonds issued in Q1 compare to the previous year?
How did the total volume of corporate bonds issued in Q1 compare to the previous year?
The total volume of corporate bonds issued in Q1 was VND37.4 trillion, over $1.6 billion. This figure represents a decrease of nearly 24 percent compared to the same period in the previous year.
Q.What was the average interest rate for real estate bonds compared to other sectors?
What was the average interest rate for real estate bonds compared to other sectors?
The average interest rate for real estate bonds in Q1 was 10.41 percent per year, making it the highest rate in the market. The banking sector had the lowest average interest rate at 4.67 percent per year.
Q.How have individual investors been affected by new bond regulations?
How have individual investors been affected by new bond regulations?
Due to new regulations on investment conditions for privately issued bonds, individual investors purchased just VND1.53 trillion worth of corporate bonds on the primary market. This is only 16 percent of the amount bought in the same period last year.
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