Abundance of issued corporate bonds harms realty market: businessman

Some real estate developers in Vietnam have issued too many bonds to mobilize capital, causing complicated fluctuations in the country’s financial sector and adversely affecting the property market, GP.Invest chairman Nguyen Quoc Hiep said.

He delivered the note at a national business meeting Friday chaired by Prime Minister Pham Minh Chinh to tackle woes in the realty market with representatives from government agencies, property developers, and banks.

Large amounts of corporate bonds will come due this year, during which woes will continue, placing a real burden on the real estate sector, Hiep said.

"Vietnamese regulators should extend the payment periods for these bonds, and issuers should be allowed to pay some with their housing products."

Another possible solution, he said, is to allow the Vietnam Debt and Asset Trading Company or Vietnam Asset Management Company to solve part of the burden to cool down the heat of such bond payments.

In terms of revising Decree 65 on corporate bond issuance, the government should consider not limiting the amounts of bonds to be issued based on the issuer’s equity capital and assets, he added.

Regarding current high interest rates from banks, Hiep proposed the State Bank of Vietnam take prompt action to cut down the rates because both inflation and forex in Vietnam are already under control.

The Hanoi-headquartered GP.Invest, founded in 2007 by Hiep, is focused on real estate investment and construction.

2022 was a crisis year for the Vietnamese real estate market and businesses. Many developers had to downsize their operational scale, stop or postpone investment activities, project implementation and initial public offerings (IPOs) due to capital constraints and poor sales.

The tightening of the corporate bond market following the arrests of Tan Hoang Minh and Van Thinh Phat leaders over bond issuance violations, and the promulgation of Decree No. 65 in September 2022 with more stringent requirements on private placement of corporate bonds made companies hesitant to issue bonds.

According to the Ministry of Construction, the number of real estate companies filing for bankruptcy last year increased by 40% year-on-year.