Decoding KS Group bondholders mortgaged Sunshine Group's bonds at Kienlongbank
Take one loan as collateral for another loan
According to information from HNX, Sunshine Group currently has two batches of bonds in circulation, SSGCH2126003 and SSGCH2127004, with a total value of VND 3,000 billion, maturing in 2026 and 2027. Both bond batches have interest rates for the first period.at 11%/year, the following periods are floating interest rates.
Of which, bond lot SSGCH2126003 was issued on November 1, 2021 with a term of 5 years. The interest rate for the first interest period is 11%/year, the following periods will be the highest savings interest rate of the 4 state-owned banks plus 4.5%/year. This group will pay interest once every 12 months. The guaranteed asset of the above bond lot from the date of issuance is 100 million dividend preference shares of Sunshine Group at KSGroup to be formed in the future.
The bond batch SSGCH2127004 was issued on December 31, 2021 with a term of 6 years. The remaining information related to the bond batch has not been disclosed.
But according to data, KS Group Joint Stock Company is the bondholder of the above two bond lots issued by Sunshine Group Joint Stock Company. Recently, KS Group mortgaged this batch of bonds at Kienlongbank, specifically:
Contract No. 360/23/HDCC-CK signed on September 14, 2023 at Kienlongbank, Tien Giang branch. The collateral for this loan is 4,422,000 Sunshine Group Joint Stock Company bonds (Code SSGCH2126003, quantity: 2,750,000 and code SSGCH2127004, quantity: 1,672,000)
Contract No. 345/23/HDCC-CK signed on September 13, 2023 at Kienlongbank, Tien Giang branch. The collateral for this loan is 5,000,000 Bonds of Sunshine Group Joint Stock Company (Code SSGCH2126003)a
Thus, through these two credit contracts, KS Group has mortgaged 7,750,000 bonds code SSGCH2126003, equivalent to 775 billion VND and mortgaged 1,672,000 bonds code SSGCH2127004, equivalent to more than 167.2 billion VND.
People continuously put up banners demanding money from Sunshine Group. Photo: Phuong Thuy
From the above data, it shows a strange point, first is that Sunshine Group issues bonds to buy voting preference shares in KS Group to be formed in the future, the next step is that KS Group buys the correct batch of bonds issued by Sunshine. Group issued to buy preferential shares of KS Group. After being confirmed by KS Securities Company to own the bonds, KS Group mortgaged this batch of bonds at Kienlongbank.
Regarding the mortgage of KS Group's corporate bonds, according to data, within 2 weeks (from September 12 to 26, 2023), KS Group, as a bondholder, signed 18 credit contracts. applied to Kienlongbank, these contracts were conducted almost simultaneously at many branches of Kienlongbank (Hanoi, Saigon, Kien Giang, Tien Giang, Hai Phong) and were very well supported by the Securities Joint Stock Company. KS Securities (KSS) is reflected in the issuance of a certificate of bond ownership. There are contracts conducted on the same day as the date of issuance of the certificate of bond ownership. The total assets KS Group has mortgaged are 59,160,568 bonds (of 6 businesses) with a total value of mortgaged assets of more than 5,900 billion VND in bonds, more than 3.9 times the equity of KS Group.
So this is a form of taking one loan as collateral for another loan.
According to analysts, in theory, corporate bonds or stocks are both assets. Whether or not to allow the use of bonds as collateral depends on the decision of the Central Bank and commercial banks. Around the world, some countries allow commercial banks to use bonds as additional collateral for loans. However, even if the Central Bank allows it, if it is found to be a risky asset, commercial banks can refuse to accept it as collateral.
KS Group Company, formerly known as SIPT Investment Joint Stock Company, was established in 2020, with an initial charter capital of 45 billion, headquartered at Sunshine Center Building, No. 16 Pham Hung, Nam Tu District Liem, Hanoi. KS Group is a company specializing in the field of real estate business, land use rights belonging to owners, users or renters.
By January 2022, KS Group increased its capital from 45 billion to 1,450 billion (32 times more), founding shareholders and owners of KS Group, including: Sunshine Group Joint Stock Company owns 51% of the shares, Ms. Tran Thi Thu Hang owns 33%, Mr. Tran Ngoc Minh owns 8%, Ms. Nguyen Thi Hong Hanh owns 8%.
It is known that Ms. Tran Thi Thu Hang is currently the Chairwoman of the Board of Directors of Kienlongbank from May 2021 to present. Ms. Hang currently holds more than 17.2 million KLB shares of Kienglongbank, accounting for 4.77% of the bank's charter capital, In addition, Ms. Hang is also the Chairman of the Board of Directors of KS Securities Company. Meanwhile, Mr. Do Anh Tuan is Chairman of the Board of Directors of Sunshine Group, which owns 4.972% of Kienlongbank.
Mr. Tran Ngoc Minh only owns 8% in KS Group but Mr. Minh is currently Vice Chairman of the Board of Directors and General Director of Kienlongbank.
Is it appropriate to use corporate bonds as collateral for loans?
In December 2022, Ho Chi Minh City Real Estate Association (HoREA) requested the State Bank to consider submitting to the Prime Minister to allow credit institutions to lend businesses new credit with collateral assets being valued corporate bonds. The maximum price is equal to 70% of the value of the corporate bond, with the condition that the enterprise commits to carry out the transaction through the lending credit institution.
"If you get a new loan and are allowed to mortgage it with corporate bonds, this is a valuable source of loan capital, with the nature of "bait capital" so that businesses can deploy business investment activities and create profits. Cash flow and liquidity can completely repay new loans and old loans, beneficial for both businesses and credit institutions to "help" each other overcome difficulties," the association said.
Regarding the issue of using bonds as collateral for loans, talking to Mot The Gioi reporter, Associate Professor-Dr. Dinh Trong Thinh (Academy of Finance), said that this loan cannot be used as an asset. secure another loan.
Associate Professor-Dr. Dinh Trong Thinh (Academy of Finance)
"Enterprises issue bonds to get money, which is a loan, but now they want to use this loan as security to borrow money from banks, which is very difficult to accept," Mr. Thinh speak.
According to Mr. Thinh, bank lending must comply with many regulations such as the borrowing enterprise having no bad debts, feasible projects and regulations on collateral, so that in case the enterprise cannot repay the debt, its assets will The asset is sold by the bank to recover loan capital. Therefore, the collateral must have a basis, but if it does not meet the regulations, the bank will bear great risks. Even if the bank accepts mortgaged assets that are not on the list, it still violates the law.
Mr. Thinh shared that banks can take corporate stocks as collateral, but taking bonds as collateral for another loan is very risky.
Investors stretch banners denouncing Kienglongband and Umee company in front of Kienglongbank's office. Photo: Phuong Thuy
Dr. Nguyen Huu Huan, Head of the Department of Financial Markets, Ho Chi Minh City University of Economics, also said that the majority of bonds that have been bought back by businesses from previous issuances are bonds without collateral. So asking the bank to lend up to 70% seems unlikely. Therefore, such a specific level should not be recommended. Depending on the risk nature of each type of bond, the bank can consider and offer a reasonable lending rate on par value.
For bonds with all conditions such as adequate collateral, cash flow appraisal and debt repayment ability, banks can completely lend over 70%, but if one of the following conditions is missing: Based on the above conditions, based on the actual appraisal, the bank will offer an appropriate loan level.
"In my opinion, this proposal cannot be implemented because it violates the bank's safety regulations," Mr. Huan stated, saying that the State Bank and commercial banks will certainly not agree. .
"If this proposal is put into practice, the risk to these loans is very large, especially for bonds without collateral and in the context of the current frozen real estate market." , Mr. Huan stated.
Sharing his views at the press conference to deploy the banking industry's tasks in 2023 held on December 27, 2022, Mr. Dao Minh Tu, Deputy Governor of the State Bank, said that credit institutions using Bonds used as collateral to grant credit to businesses are not in accordance with current regulations of the State Bank.
“The Ho Chi Minh City Real Estate Association recently proposed a lot. But there are proposals that can be considered, and there are also proposals that belong to the field of law and are already within the legal framework, so they cannot be implemented arbitrarily," Mr. Tu explained.