F88 Business Joint Stock Company, the owner of the pawn chain of the same name, has just announced the issuance of private bonds worth VND 100 billion.
The proceeds from the company will be used for mortgage lending activities, store expansion, and salary and bonus for employees.
The bond has a term of 12 months, no collateral and a fixed interest rate of 11.5%. A domestic securities investment fund spent 74.6 billion VND to buy this bond, the rest came from individual investors.
This is the seventh time this year F88 has raised capital through the bond channel. The total issuance value has reached 800 billion dong. Some issues have a fixed interest rate of up to 12.5% a year.
In the credit rating report published on the afternoon of October 12, FiinRatings rated F88 at a “stable” level when this business continuously completed the business plan set out for many years and is having a long-term vision to become a provider of personal financial services besides pawn lending for the next 5 years.
As of the end of June, financial leverage, as measured by a debt-to-equity ratio, was 3.5 times. The company is planning to raise equity capital from strategic investors early next year, so the financial leverage ratio can be maintained below 4 times in the medium term.
Total subprime loans (90 days past due) is approximately 1% of total outstanding loans at the end of July and provisioning expense used to write off bad debts is about 8-9% per annum on a yearly basis. total outstanding loans, lower than 20-25% of other consumer lending companies.
In the latest business results announcement, F88 management said that the profit after tax in 2019 is 16.6 billion VND and in 2020 is 44.8 billion VND. FiinRatings forecasts the company’s return on equity (ROE) this year around 18%, up 5 percentage points from fiscal 2020.