Corporate bonds issued by real estate firms account for a high proportion of securities that mature in three years. Experts warn of high risks if the real estate market cannot recover by that time.

As of March, the total value of G-bonds reached more than VND1,340 trillion ($58.3 billion), slightly down 0.7% against late 2020.

The financial health of many enterprises that issued bonds in 2020 is getting worse, with profits not high enough to pay bond interest.

The HCM City Real Estate Association (HOREA), in its report about the real estate market in 2020 and prospects in 2021, says the real estate bond market will continue to grow well this year.

The movement of issuing corporate bonds has cooled down, but the large number of bonds that have been issued with no collateral, or untrustworthy collateral, is viewed as a ‘bubble’ that may burst at any time.

Businesses are creating virtual assets by issuing corporate bonds, but experts warn that during the Covid-19 pandemic, a ‘bond bubble’ will bring high risks to the economy.

Investors are still preferring corporate bonds to bank deposits, and are withdrawing money from banks to buy corporate bonds to enjoy higher interest rates.

While in developed markets corporate bonds act as the major channel that conducts capital for the economy, in Vietnam they are still in a very early stage of development.

Cutting costs and restructuring products are what many real estate firms are doing to deal with difficulties caused by COVID-19.

2020 is expected to be a tough year for real estate developers, but some real estate firms still have high hopes thanks to the large land holdings they own.

More and more domestic real estate firms have begun to seek investment opportunities in global markets, according to Savills Vietnam.

There are two typical characteristics of the real estate firms’ race to issue bonds – the high amount of bonds issued and the high interest rates.

Commercial banks are issuing international bonds because they need foreign currencies to satisfy dollar capital demand.

Whether to allow real estate firms to issue bonds in the international market remains a controversial issue.

Forty percent of bonds issued by banks are bought by securities companies, but analysts believe that the real bond holders are commercial banks.

Commercial banks’ purchase of real estate corporate bonds is considered indirect lending to real estate firms, experts say.

Vietnam is following a skeptical interest rate policy, with few and minor adjustments.

Real estate firms are rushing to issue corporate bonds, which analysts say shows their thirst for capital. But there are risks.

Personal money appears to be shifting from stocks and bank deposits to corporate bonds.