Recently, Phat Dat Real Estate Development JSC has announced that it will issue 1,500 bonds worth VND150 billion ($6.41 million) for the second and third quarter of 2019. Earlier, the firm had already issued bonds three times worth a total of nearly VND850 billion ($36.35 million). All four issues have interest rates ranging from 10.5-14.5 percent.
Meanwhile, many other realty firms have also issued bonds in the first half of the year. Van Phu-Invest issued bonds worth VND800 billion ($34.21 million) with an interest rate of around 12 percent, while Nova Group issued VND400 billion ($17.1 million) worth of corporate bonds in two waves with an interest rate of 11 percent.
Property businesses issue more high-yield bonds to boost capital mobilization.
The moves followed banks’ new regulations that tighten lending to the real estate sector, rising interest rates and imposing stringent conditions for disbursement.
Specifically, a recent draft circular prepared by the State Bank says loans for home puchases worth more than VND3 billion (more than $128,200) will apply risk coefficient of 150 percent, three times higher than the current ratio.
The rise of credit for the real estate sector was reported to slow to 8.56 percent last year, from 12.86 percent in 2016.
Chairman of the Vietnam Real Estate Association Nguyen Tran Nam said banks have been the main source of capital for Vietnam's real estate industry. If the central bank tightens credit further, firms will have to look to other channels like shares and bonds to attract capital. There are only 65 out of more than 10,000 real estate enterprises listed on the stock market.
Since the beginning of the year, there have been over VND60 trillion (nearly $2.57 billion) of corporate bonds issued, a report by MB Securities Joint Stock Company (MBS) showed.
In Vietnam, real estate, construction and infrastructure sectors ranked second in terms of bonds issued, making up 27 percent at VND16.23 trillion ($694 million).
