Amidst a lull in the corporate bond market, Vietnam's leading housing developer Nam Long Investment Corporation has gone ahead with a VND500 billion ($21 million) issue, with its equity in subsidiaries as collateral.
The non-convertible bonds, issued to the World Bank’s financial arm IFC, have a maximum term of seven years (maturing on March 28, 2029) and an annual interest rate of 12.94%.
Collaterals are Nam Long's 51% stake and 50% stake in Nam Long VCD JSC and NNH Mizuki JSC, carrying valuations of VND1,850 billion ($78.37 million) and VND1,501 billion ($63.59 million), respectively.
The purpose of the bond issuance is to implement the second phase of the Nam Long Waterpoint Project, a residential township project by the Vam Co Dong river in Long An province, about 30 km southwest of Ho Chi Minh City. Proceeds will be used for capital contribution to Nam Long VCD.
This is the second and final instalment under an issuance agreement with the IFC. The first one, with a par value of VND500 billion ($21 million) that Nam Long issued to IFC in June, carries an interest rate of 9.35%.
Nam Long is the only real estate company to have issued bonds in the last two months, according to the Hanoi Stock Exchange (HNX). The last successful issuer in the real estate sector was Ba Ria-Vung Tau House Development JSC (HCMC Stock Exchange or HoSE: HDC), who raised VND30 billion ($1.27 million) at the end of October with an interest rate of 11% per year.
In the third quarter of 2022, Nam Long's net revenue reached nearly VND882 billion ($37.36 million), up 5.8 times year-on-year, while its after-tax profit hit nearly VND51 billion ($2.16 million), equivalent to 17.29% of Q3/2021.
In the first nine months of the year, the company posted net revenues of VND2,710 billion ($114.81 million) and after-tax profits of VND276 billion ($11.69 million), up 244% and down 61% year-on-year, respectively.
By September 30, 2022, Nam Long had total liabilities of VND12,604 billion ($534 million), up 24.9% compared to the beginning of the year. Of this, short-term debt accounted for 65%.
On the HoSE, the Nam Long stock (NLG) closed Friday at VND30,500 ($1.29) per share, down more than 53% from the historic peak they had reached at the beginning of the year.