Vietnam property firms issue $5.7bn in bonds amid rising financing costs in January-September: data

Developers turn to bonds to ease refinancing pressure

VIS Rating's data showed that 61 bond issues by nearly 30 property companies were successfully completed during the period, with interest rates on some issues ranging from 11 percent to 12.5 percent per year.

Nguyen Duy Quang, an economic and public policy expert at the Ho Chi Minh City University of Economics and Finance, said the bond market's expansion reflected a shift in corporate funding as traditional sources of capital became more constrained.

Credit growth in the real estate sector reached 8.6 percent in the first half of 2026, well below the 15 percent recorded in the same period last year, amid tighter controls aimed at limiting systemic risks.

Meanwhile, capital raised through new share issues plunged 86 percent to just VND350 billion ($13.3 million) in the first six months of the year. 

Property companies also face the challenge of refinancing approximately VND167 trillion ($6.4 billion) in bonds falling due from the fourth quarter of 2026 through the end of 2027.

Quang said issuing bonds at annual interest rates of 11 percent to 12.5 percent was a way for developers to maintain liquidity, keep construction projects on schedule, and reduce the risk of cash flow disruptions.

High borrowing costs raise financial risks

The recovery in corporate bond issuance could support the wider economy by providing funding for ongoing projects, enabling developers to complete properties for handover, and stimulating demand across construction materials, building and related services, experts said.

The bond market could also ease pressure on banks to provide medium- and long-term financing, diversify maturity risks, and support the development of a more diversified financial system.

However, borrowing at high interest rates raises concerns about developers' financial health, particularly as many listed property companies continued to record negative operating cash flow in the first half of 2026 and the property market's recovery remained uneven.

Economic expert Nguyen Nam Trung warned that annual interest rates of 11 percent to 12.5 percent could significantly increase financing expenses and erode profit margins.

If developers fail to generate sufficient cash flow through regulatory approvals and property sales, they could face mounting repayment pressure when the newly issued bonds mature between 2028 and 2030.

"The key concern is the quality of capital deployment," Trung said, adding that funds raised should be used to complete projects and create real assets.

If the money is merely used to settle existing debts without generating additional value, the financial burden would simply be postponed, he said.

High borrowing costs could also be passed on to property prices, making homes less affordable for buyers seeking housing for their own use, Trung added.

Quang cautioned that bond issuance must be matched by companies' financial capacity and ability to execute their projects.

Poorly selected issuers with weak financial foundations could struggle to meet repayment obligations, potentially affecting the credit system and investor confidence.

Transparency and accurate disclosure of the intended use of proceeds are essential to maintaining market stability, Quang added.