Analysis of HAGs Singapore Note Issue - Essay Example

The company businesses were also operated in the surrounding cities of Can Tho and Danang. In addition to focussing on the business of real estate, the company was also leading its business through hydroelectric power generation, and the plantation of rubber among several other businesses. At the time when HAG was issuing the bond, it had already diversified its business into mining coal. In terms of geography, most of HAG’s businesses were located in Vietnam. HAG, a renowned real estate company in Vietnam, was going to issue approximately ninety million US dollars of the nine-point eight-five notes, which were the debt instruments, in Singapore in the year 2011. After deductions of all the estimated expenses that were payable, the company estimation of the net proceeds from this offering to be around eighty-point-seven million US dollars.

From this perspective, the issue of notes led to several questions arising including the overall cost of the debt. In addition, the reasons HAG chose to raise money in a foreign country, Singapore, and not in its country, Vietnam. All of these were to give answers to the costs at which HAG was borrowing the note issue in Singapore, the level at which it was borrowing, and whether there was a likelihood of HAG being downgraded from its current rating position of B (Richard Ivey School of Business, 2013).

Since it is difficult to obtain real figures on the bank loan proportions for the sector of the construction and the real estate business in Vietnam, the government should issue strong regulations. These should be made to prevent the country from deepening further into inflation. High inflation rates in the country will force companies to issue notes in foreign countries. The regulation through the limitation of the growth of Credit is important more so in the real estate business to help in putting inflation into check.

The growth of credit can be controlled through the reduction of the amount as well as the pace of loan issuance to the non-productive sectors. Among the significant risk factors that affect the issuance of notes is the company’s cash flow volatility in Vietnam.