Real estate businesses have a headache with bond debt

According to information published by Hano-vid Company, in the first half of 2024, the debt/equity ratio increased from 4.42 in the first half of 2023 to 6.77 times in the first half of 2024, equivalent to a debt of nearly 34 trillion VND.

Bond debt/equity balance decreased slightly from 1.83 times in the first half of 2023 to 1.81 times in the first half of 2024, corresponding to bond debt balance of nearly VND 9.6 trillion.

However, Hano-vid's after-tax profit is often modest, especially compared to the size of its equity. Hano-vid's after-tax profit in the first half of 2024 reached VND7.8 billion, down 80.7% over the same period last year.

Notably, the report on principal and interest payments on bonds in the first half of 2024 shows that Hanoi-vid is paying interest on 182 issued bonds with a total par value of VND9,654.6 billion.

The term of these bonds is about 5-7 years, most of them are unsecured and Maritime Bank (MSB) is the depository.

Or in the case of Thien Phuc International Hotel Company, known as the owner of the 4-star Novotel Saigon Center Hotel in Ho Chi Minh City. According to published information, in the first half of 2024, the financial indicators of Thien Phuc International Hotel Company are still quite "gloomy" when the company's negative equity has lasted from 2022 until now and has not improved.

The financial report shows that in the first half of 2024, the company had negative equity of VND 454.5 billion, while in the same period last year it was negative VND 902.9 billion. The debt/equity ratio increased from 9.63 times in the previous period to 10.67 times in the first half of 2024, corresponding to a debt of VND 4,849.5 billion.

The company reported a loss of VND115.5 billion in the first half of 2024, compared to a loss of VND369.6 billion in the same period last year. Previously, 2021 and 2022 both had huge losses of more than VND780 billion.

Regarding bonds, the report shows that the company's bond debt/equity ratio decreased from 7.11 times in the previous period to 6.6 times in the first half of 2024, equivalent to a bond debt of VND 2,999.7 billion.

Despite its continuous business losses, Thien Phuc Company has issued many bonds since 2020. On August 31, 2020, Thien Phuc Company successfully mobilized 30 bonds with a total face value of VND 3,000 billion. All 30 bonds are still in circulation, deposited at Tan Viet Securities Joint Stock Company (TVSI) and have the same maturity date of August 31, 2025 and an interest rate of 11%/year.

The report on principal and interest payments for the first half of 2024 shows that Thien Phuc Company cannot make payments for all 30 lots of these bonds. The reason given by the company is that it has not yet arranged the source for payment.

The above are just enough cases to show that bond maturity pressure is still a headache for many businesses.

According to a newly updated report from MBS Securities Company, the value of corporate bonds bought back before maturity in August is estimated at over VND2,400 billion, down 93% compared to the previous month, of which banks account for 44%, real estate groups account for 9%. Accumulated from the beginning of the year until now, about VND110,300 billion of bonds have been bought back before maturity, down 34% compared to the same period.

Currently, the total value of corporate bonds with delayed payment obligations is estimated at VND 209,200 billion, accounting for 30% of outstanding corporate bonds in the entire market, of which the real estate industry group continues to account for the largest proportion of about 68% of the value of delayed payments.

Source: https://laodong.vn/kinh-doanh/doanh-nghiep-bat-dong-san-dau-dau-voi-no-trai-phieu-1384457.ldo