Some large real estate firms successfully issued corporate bonds

In the past, issuing corporate bonds was done justly by large corporations.

Vingroup (VIC), The Gioi Di Dong (MWG), Masan (MSN) and Gelex once sought capital through bond issuance campaigns, and buyers were mostly financial institutions, Vietnamese and foreign.

In 2017, through many collection campaigns, Techcombank Securities (TCBS) successfully bought VND1.3 trillion worth of Vingroup corporate bonds. Of the VND1.2 trillion worth of The Gioi Di Dong bonds issued in late 2017, up to 97 percent were sold to insurance companies. The biggest buyers were Prudential Vietnam, Manulife and AIA.

But things are different now. Large and powerful corporations now seek capital by issuing international convertible bonds.

Novaland, a real estate developer, for example, has successfully issued $160 million worth of international convertible bonds. 

The 5-year bond is US dollar denominated, convertible into ordinary shares with the initial price of VND74,750 per share, or 15 percent higher than the reference price on the day of issuance. The bond has the interest rate of 5.5 percent per annum and payments are made every six months.

The issuance campaign was conducted with the consultancy of a foreign institution, and the bonds have been listed on the Singaporean market since April 30. 

Global Capital commented that this was the first Vietnamese convertible bond overseas listing in the last six years, breaking the longstanding silence since the previous similar transaction.

More recently, Vinpearl (VPL), a subsidiary belonging to Vingroup, has announced the plan to issue $325 million worth of international bonds. However, unlike Novaland, the international bonds to be issued by Vinpearl will be convertible into VIC shares that Vinpearl is holding.

By the end of 2017, Vinpearl had held 90 million VIC shares, or 3.4 percent of Vingroup’s charter capital.

Local newspapers reported that Vingroup has signed consultancy contracts with Bank of New York Mellon (London and Luxembourg branches), Credit Suisse Ltd (Singapore) and Deutsche Bank (Hong Kong branch).

An analyst commented that large Vietnamese corporations tend to use international consultants when issuing bonds overseas as a ‘warranty’ for the issuance, though they have to pay high fee for the service.

Foreign consultants have been used to issue bonds in the domestic market. The Gioi Di Dong, for example, issued bonds guaranteed by Credit Guarantee and Investment Facility (CGIF), an ADB’s trust fund.

Meanwhile, Gelex’s issuance of VND400 billion worth of bonds, which had a smaller scale, was carried out with consultancy from Shinhan Vietnam Securities (SSV).  Within two months, SSV found three investors for Gelex, including two from South Korea – Shinhan Bank and Hana Bank.

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Mai Thanh