Vietnam Developer Plans Dollar Bond Sale on Rising Home Demand

Updated on

Nam Long Investment Corp., a developer that’s won support from subsidiaries of Keppel Land Ltd. and Ireka Corp Bhd may sell as much as $30 million in offshore bonds amid a housing rebound.

Vietnam’s leading affordable home provider plans to issue $15 million to $30 million of five- to 10-year securities by the end of the year, Chairman Nguyen Xuan Quang said in an interview. The bonds may be convertible into shares in the company’s housing projects, he said.

Nam Long’s notes would be the first overseas bonds issued by a Vietnamese property developer since November 2013, Bloomberg data show, and the first ever for the company. Vietnam’s real estate market is showing signs of improvement, with affordable housing helping to pave the way.

“The market is getting more exciting and home buyers are ready for a new cycle,” said Asia Commercial Bank Securities’ senior analyst Pham Thai Thanh Truc, who recommends holding Nam Long’s stock. “This is the right time for developers like Nam Long to launch their projects.”

The company’s shares have risen 9.7 percent this year on the VN Index, compared with 2.3 percent in 2014. Nam Long dropped 0.5 percent as of 11:02 a.m. in Ho Chi Minh City trading.

Transactions Double

Property transactions doubled in the first six months with 9,250 in Hanoi and 8,750 in Ho Chi Minh City, according to data on the government’s website July 21. Loans for property increased 13 percent to 340 trillion dong ($15.6 billion) through the end of April from the end of 2014, according to the same posting.

Affordable home sales in Ho Chi Minh City rose 124 percent year-on-year to 5,765 units in the first six months, according to CBRE Vietnam. Hanoi sales jumped 15 percent on-year to 2,000 units in the same period.

Nam Long targets to sell more than 2,000 affordable units this year, up 54 percent from 2014. The bond proceeds would be prioritized for affordable home projects, which make up about 90 percent of the home products Nam Long plans to offer through 2017, Quang said Wednesday.

“The market was frozen with few sales for a long time since 2008, but people’s housing needs have never stopped,” Quang said. “Now it’s time to satisfy that accumulated demand.”

The Ho Chi Minh City-based company said it completed a 5 percent stake sale totaling some 140 billion dong to Ibeworth, a subsidiary of Singapore-based Keppel Land this month. Nam Long forecasts net income will jump 75 percent year-on-year to 181 billion dong in 2015.

“With the property sector in its initial stage of warming up, bank lending has flowed,” said Alan Pham, the chief economist at VinaCapital Group Ltd., the nation’s largest fund manager with $1.5 billion under management. “The ability to successfully float a bond issue would add further evidence of market confidence.”