Business

Real estate corporate bond issuance volume declines 55 percent

SGGP
The Ministry of Finance, on July 13, informed that after six months of implementing the new legal framework on corporate bonds, the volume of corporate bonds issued through private placement was above VND168.7 trillion, up 3.2 percent over the same period last year. The volume of corporate bonds issued through public offering was more than VND15.37 trillion, equivalent to 50.3 percent of bond issuance volume in 2020, accounting for 8.3 percent of total corporate bond issuance volume.
Real estate corporate bond issuance volume declines 55 percent ảnh 1 Illustrative image
According to the ministry, credit institutions were the largest issuers, accounting for 40.2 percent of the total bond issuance volume. Real estate bonds accounted for 13.2 percent of total bond issuance volume, down 55.5 percent over the same period last year. The average interest rate of corporate bonds in the first six months was 7.9 percent per annum, down 1.6 percent per annum compared to the average interest rate of 9.5 percent per annum in the same period last year.

Regarding investors, securities companies were the main investors in the primary market, accounting for 44.4 percent of the total bond issuance volume, while credit institutions account for 25 percent. The proportion of individual professional investors, who buy corporate bonds through private placement in the primary market, accounted for 5.7 percent of the bond issuance volume, a sharp decrease compared to the proportion of 12.68 percent last year.

Besides the above positive results, along with the trend of shifting mobilized capital from bank credit channels to bond issuance channels, in the corporate bond market, there are still potential risks for enterprises, investors, and the market, which have been warned many times by State management agencies. For instance, enterprises issue a large volume of bonds with high-interest rates but use capital ineffectively or face difficulties in production and business activities, so they cannot repay bond principal and interest. Investors should be cautious that high-interest rates come with high risks, so they must carefully evaluate the risks before deciding to buy bonds.

By Ha My – Translated by Thuy Doan

Other news