Facing difficulties in accessing bank loans at reasonable interest rates, many businesses are seeking to raise capital by issuing corporate bonds.
Vietnam Bond Market Association general secretary Do Ngoc Quynh said raising funds through bond issues will help enterprises become less dependent upon financial institutions.
Compared to raising capital by issuing stock, bond issues will not dilute existing share values or affect ownership or control of the enterprises, Quynh added.
In recent days, three more listed companies have announced information concerning bond issue plans worth trillions of dong.
Sai Gon Thuong Tin Real Estate Co (SCR) plans to issued bonds worth 99 billion VND (4.7 million USD) with a term of 18 months and a floating coupon rate which will be adjusted monthly. Interest for the first month will be 17 percent per year.
Sai Gon-Ha Noi Securities Co (SHS) plans a three-tranche bond issue worth a combined 350 billion VND (16.7 million USD) with a coupon rate of 20 percent, while Agribank Securities Co (AGR) also expects to issue five-year bonds worth 3 trillion VND (142.8 million) with floating interest rates.
Last month, Khang Dien House Trading and Investment Co (KDH) successfully issued 50 billion VND (2.4 million USD) worth of bonds at a fixed interest rate of 21.5 percent. Song Da Urban and Industrial Zone Development and Investment Co (SJS) also raised 700 billion VND (33.3 million USD) by selling bonds with a coupon rate of up to 22 percent.
The fact that companies are willing to seek funding with such high yields is a clear sign that enterprises are desperate for capital.
"This method is suitable to medium-sized and large enterprises with a high degree of transparency," Quynh said./.