Realty firms should issue bonds to raise capital: HoREA
Realty firms should issue bonds to raise capital: HoREA
Real estate companies should issue corporate bonds to raise capital, add more property projects and restructure their debts as the State Bank of Vietnam (SBV) has restricted lending to property firms, the HCMC Real Estate Association (HoREA) said.
HoREA, in a notice to its members sent in late February, cited governmental Decree No.163 on the issuance of corporate bonds, which took effect on February 1, pointing out that real estate firms should leverage the new method of capital mobilization due to its feasibility, especially as SBV has gradually limited commercial banks’ lending to the local property market.
HoREA also hailed Novaland, TTC Land and TNR as good examples of companies that have successfully issued corporate bonds. In the near future, Vinhomes is expected to issue bonds as well.
Corporate bonds have attracted increasing numbers of investors as they offer higher interest rates than savings during the same period, particularly among branded bond issuers with feasible business strategies.
With the prevailing legal framework, including Decree No.163, the Enterprise Law and laws related to the stock market and financial institutions, alongside the rising demand for capital among property firms, HoREA said that the corporate bond market would see strong growth in the years to come.
However, real estate firms have to ensure the appropriate use of capital generated from the issuance of corporate bonds and execute manufacturing plans and investment projects effectively to guarantee the benefits of the involved parties, said HoREA.
A corporate bond is a type of stock that matures after at least one year and is issued by corporations to raise capital for wide-ranging reasons, reducing their dependence on financial institutions. Issuers of corporate bonds have to take responsibility for the efficiency of their capital use and their capacity to pay debts.
