Checking and supervising of electronic bond bidding at the Hanoi Stock Exchange. (Source: VNA)Hanoi (VNA) - Manysecurities companies have opted to issue corporate bonds to raise capital tofinance their margin lending service, following upbeat forecasts for the marketin 2018.
Vietnam’s benchmark VN-Index closed 2017at over 984 points, a rise of 48 percent over the end of 2016. The localsecurities market value reached about 3.36 quadrillion VND (147.4 billion USD),equivalent to more than 74 percent of the country’s gross domestic product(GDP).
The boom on the securities market hashelped brokerage companies expand their margin lending, but also illustratesthat their capital growth has not caught up with investors’ borrowing demand.
To finance their lending expansion, manycompanies have decided to issue bonds.
Saigon Securities Inc is seekingshareholders’ approval for the issuing of a maximum 1.2 million convertiblebonds worth total 1.2 trillion VND in 2018 at the rate of 4 percent per year.The bonds will likely be offered to less than 100 investors, excluding professionalinvestors, with priority given to foreign financial institutions.
According to the company, this issue isaimed at raising capital for its operation.
In late December, HCM Securities JSC issued800 billion VND bonds to seven investors in a private placement. These one-yearnon-convertible and non-warranty bonds were sold at the coupon rate of 9 percentper year.
Earlier in October, Tan Viet Securities Inc(TVSI) also offered corporate bonds worth 150 billion VND to investors with anattractive interest rate of 9 percent per year for the first three months. Therates for the following terms were equal to the 12-month saving rate ofVietcombank plus 2-2.5 percent.
According to market observers, some othercompanies may follow this step in the context of higher investor demand forfix-income assets, especially when corporate bonds are offering interest rateshigher than banks’ deposit rates.
Demand for margin loans is expected to risethis year because of the bright market outlook. Corporate bond issuance willhelp the company raise capital for their lending expansion, enhancing itscompetitiveness in the market.
By the end of September 2017, total marginloans of all securities companies reached more than 36.16 trillion VND (1.6billion USD), up 22 percent year-on-year.
Five firms with loans of over 1 trillion VNDincluded Saigon Securities Inc (SSI), Viet Capital Securities (VCI), MBSecurities (MBS), VNDirect Securities (VND) and Viet Dragon Securities (VDS).
Meanwhile, total equity capital of the 10biggest brokerage companies on the HCM Stock Exchange reached about 25 trillionVND (1.1 billion USD).
The three biggest firms were SSI with equity capitalof over 8.9 trillion VND, followed by HCM Securities Co and Viet Capital Securitieswith equity of over 2.6 trillion VND each.- VNA
VNA
