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30 large enterprises mobilized more than US$4 billion through corporate bonds

15:16 | 27/04/2019

VCN – The market size of corporate bonds in Vietnam is growing strongly with the success rate mainly belonging to banking, financial services and real estate.

30 large enterprises mobilized more than us 4 billion through corporate bonds Successfully tendered over 2,000 billion VND of Government bonds
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30 large enterprises mobilized more than us 4 billion through corporate bonds Already mobilized over 36.000 billion VND of Government bonds
30 large enterprises mobilized more than us 4 billion through corporate bonds
Investors trade at Rong Viet Securities Company

That is the content mentioned in the recent macro report published by Rong Viet Securities Company. The report stated statistics from the Asian Development Bank, FiinPro and Rong Viet Securities about the issuance of TPDN of Top 30 large enterprises in Vietnam. Accordingly, 30 large enterprises in Vietnam have total value of circulating bonds of more than VND95,600 billion, equivalent to US$4.13 billion, accounting for 96% of the total value of circulating corporate bonds.

Scale increased sharply

According to the State Securities Commission (SSC), the volume of successfully issued bonds in 2018 reached VND224,000 billion, up 94.5% YoY. The outstanding debt of the corporate bond market in 2018 was VND474,500 billion, up 53% YoY, and reaching 8.6% of GDP 2018.

Based on a survey of corporate bond issuance by listed companies, Rong Viet Securities found that banks, financial services and real estate accounted for a large proportion in the issue. Except the banking sector, the maturity date of corporate bonds in most major industries is less than 3 years.

Regarding the banking sector, banks have boosted the corporate bonds issue in order to double capital and supplement long-term capital with successfully issued interest rates of around 7.5% per year. However, there were still differences between the private banking sector and State commercial banks. State commercial banks tended to issue long-term bonds of more than 5 years, while the other sector was focusing on mobilizing 3-year term bonds.

In addition, securities companies and investors, financial services took the initiative in issuing corporate bonds with a mobilization scale of VND500 to 1,200 billion and a major term of 2 to 3 years. Corporate bond yields of this group were about 8% to 10.5% per year.

On other large companies in the real estate industry such as Vingroup (and its member companies), Novaland, Dat Xanh, etc, the policy to limit the credit flow into real estate requires the companies to be more active in the financial market. The purpose of using capital is mainly to develop real estate projects with a 2-year term. In terms of interest rate, the profit of Vingroup's ordinary bond yields in 2018 were 10% per year, lower than the average of 10.3% per year in 2017.

The yield rate is stable

According to Dragon Vietnam Securities, the corporate bond yield has dropped sharply and is stable at about 8-10% per year for ordinary bonds. Therefore, the corporate bond yield has a significant difference with mobilizing interest rate and lending interest rate in the banking system.

According to the State Bank, the mobilizing interest rate for over 12-month deposits is about 6.6-7.3% per year and the lending interest rate for production and business loans is normally at 9-11% per year.

In the market, apart from the banking sector that can issue corporate bonds with yields of around 7.5% per year, Rong Viet Securities experts recognized the increasing participation of big international organizations which play the role of guaranteeing the issuance, such as MWG (Mobile World), CII (Ho Chi Minh City Infrastructure Investment Joint Stock Company), MSN (Masan Group JSC) with yields under 7%.

International Finance Company (IFC) has proposed a program to support Vietnamese enterprises to issue domestic currency bonds to the international market, with the name of Bong Sen bond. This will diversify capital sources for enterprises in the context of stable credit growth around 14% per year.

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However, according to experts of Rong Viet Securities, the lack of a credit rating organization continues to be a bottleneck for Vietnamese enterprises in approaching the world capital market. Therefore, Rong Viet Securities proposed that large enterprises that were listed on the stock market and publicize information, will have the opportunity to access this capital easily.

By Nguyen Hien/ Huyen Trang