Hard to access bank loans, listed firms rush to issue bonds to raise capital

Series of listed companies in securities industry and real estate announced the issuance of bonds to raise capital because they cannot access enough capital from banks.

Having collected nearly one trillion dong after the issuance of more than 61.3 million shares, Quoc Cuong Gia Lai JSC, said that it would issue 800 billion dong of convertible bonds. Earlier, Hoang Anh Gia Lai Group JSC also announced selling 1.1 trillion dong of convertible bond for the Singaporean investment group Temasek.

The securities companies also followed the move to continue to announce similar projects. VNDirect Securities JSC announced its plans to issue 500 billion of convertible bonds; Thang Long Securities JSC is about to issue 500 billion of two-year bonds with the quarterly payment of coupon rate at 11.7 percent a year, and Saigon – Hanoi Securities JSC plans to sell 250 billion of one year bonds with annual interest rate of 14 percent.

Doan Nguyen Duc, Chair of Hoang Anh Gia Lai Group JSC said that his company has many medium and long-term projects, while seeking capital from banks is not enough, so HAG has to mobilise through other channels.

Deputy general director of a securities company that has just announced the issuance of bonds, said they now do need money to invest in shares and securities services. However, because banks are not eager to fund their operations, so they have to issue bonds to raise capital.

Nguyen Quang Vinh, general director of Saigon – Hanoi Securities JSC, said that prices of many stocks are at attractive levels for medium and long term investment. SHS is issuing bonds in order to improve its underwriting capacity, but also to spend money investing in potential stocks.

In the disclosure of the 500 billion dong bonds issue, VNDirect Securities JSC said that the company will spend 300 billion dong on stock dealing. However, the leader of this company said that the main objective of the issuance of convertible bonds is to find a strategic partner.

Quach Manh Hao, deputy general director of Thang Long Securities JSC, said a capital gain from his company’s bond issuance will be used for stock investment. However, the amount is how much investment will be based on market conditions.

A source from a large securities company said, with a decline in stock prices, most banks are tightening the purse strings for the stock investment. Meanwhile, many securities companies finds it attractive with investment opportunities when the market falls.
For large real estate companies, the situation is similar. Even, large and reputed companies such as Hoang Anh Gia Lai Group, Quoc Cuong Gia Lai Group cannot get enough capital from banks.

These factors have prompted the securities companies, real estate firms to look to mobilise capital from bonds despite costs from this source are not as cheap as bank loans. – Vnexpress

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