Real estate corporate bond interest rates hit 13.5%

Real estate corporate bond interest rates hit 13.5%

The pressure to increase bond interest rates is occurring in parallel with the rise in deposit interest rates in the banking system.

The move was made in the context that many enterprises have been urgently raising trillions of Vietnamese đồng to restructure debts and pay salaries and bonuses at the end of the year. — Photo cafef.vn

Several real estate firms have sharply raised bond interest rates into double digits of 12 to 13.5 per cent as capital demand surges toward the year’s end.

Khải Hoàn Land Company currently holds the market’s highest rate. The firm recently announced the successful issuance of VNĐ80 billion (US$3 million) in bonds with a five-year term and an annual interest rate of up to 13.5 per cent, the highest level seen since the bond market downturn in 2022.

The upward pressure on bond yields comes as deposit rates across the banking system also climb. Alongside medium and small-sized lenders, two of the country’s four largest banks, BIDV and VietinBank, have joined the latest round of interest rate increases.

Medium and small-sized banks are offering long-term deposit rates of about 6.5 to 7 per cent a year and up to 9 per cent for large deposits.

The shift reflects urgent capital-raising efforts by many enterprises, from construction and real estate to banking, as they seek trillions of Vietnamese đồng to restructure debts and cover year-end salaries and bonuses.

A notable example is the industrial real estate sector. Industrial Investment and Development Corporation, or Becamex IDC (HOSE: BCM), recently completed a VNĐ900 billion bond issuance. Together with a VNĐ660 billion offering finalised days earlier, the company raised more than VNĐ1.5 trillion in just one month. The funds form part of its plan to mobilise VNĐ2 trillion to restructure debts and supplement capital for key projects.

In construction, Tam Trinh Construction Investment Joint Venture Company Limited drew attention by raising VNĐ2 trillion in just one week. The company issued VNĐ1.1 trillion in bonds with a 72-month term shortly after completing a VNĐ900 billion issue.

Coteccons Construction (HOSE: CTD) has also announced plans to raise up to VNĐ1.4 trillion to cover year-end salaries and bonuses for employees, about VNĐ250 billion, and to settle debts with partners.

According to the Vietnam Bond Market Association, November saw 24 private placements worth more than VNĐ19.6 trillion. The banking sector led with over VNĐ11.3 trillion, followed by real estate with more than VNĐ5.13 trillion. 

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