Real estate bond issuances hit $2 billion in first half of year

Wednesday, Aug 19, 2020 07:48

About US$2 billion worth of bonds was issued by real estate firms in the first six months of 2020. — VNA/VNS Photo

Enterprises in the real estate sector issued some VND45.59 trillion (US$2 billion) worth of bonds in the first half of this year, equal to 80 per cent of the figure of 2019 as a whole.

The growth was attributed to the safety of bonds compared to other investment vehicles currently facing fluctuations, said Nguyen Duc Quan, director of the Asia - Pacific Securities Joint Stock Company.

Lower deposit interest rates at banks also contribute to fuelling flow of capital into the bond market, he added.

Financial and banking expert Nguyen Tri Hieu warned that a lack of sound control may lead to a bursting of the bond bubble after a short period of heated growth, like a decade ago.

The COVID-19 pandemic is expected to plague the real estate market in another way, with companies likely to face difficulties from plunging transaction numbers and the distinct possibility of bankruptcy.

Ineffectively run businesses may be unable to pay bondholders when the due date arrives. The fact that real estate companies have quickly issued bonds has made some experts concerned about a host of associated risks. — VNS

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