More than 42,000 billion VND of bonds have their payment period extended

According to VNDirect, from March to the end of June, more than 30 issuing organizations reached agreements to extend bond payments with a total value of more than VND42,000 billion.

Negotiations to extend the payment period for corporate bonds have been active since the new decree took effect on March 5. Previously, issuers were not allowed to change the maturity of issued bonds, but the new regulation allows for a maximum extension of two years with the consent of bondholders. In addition, issuers can also pay the principal and interest of bonds with assets other than cash.

According to the analysis team of VNDirect Securities Company, the extension period of recent bond lots is very diverse, from 1 month to 2 years. The interest rate is also agreed to increase by 0.5-3% compared to the initial interest rate.

Most issuers have extended a large number of bonds operating in the real estate sector. Typically, Phu Long Real Estate Company reached an agreement to extend 12 lots with a total value of VND14,000 billion. Sovico Group extended 52 lots of bonds with a total value of about VND9,600 billion. Some of Sovico's bond lots had an initial maturity date of May 2023 but were later changed to May 2025.

Novaland also reached an agreement to extend 3 bond lots with a total value of 2,750 billion VND, while Hung Thinh Land extended 1,200 billion VND with a period of 6-7 months longer than the original.

Extending the maturity of bonds is considered a temporary solution, helping the issuing organization have more time to recover production and business and generate cash flow to repay debts. However, this may cause them to face greater financial cost pressure in the future.

"The pressure on maturing bonds is increasing in the last two quarters of the year, while business operations and cash flow are improving, so negotiating for an extension is one of the best solutions that issuers can choose at this time," VNDirect's analysis team assessed, and predicted that negotiation activities will continue to be active in the coming time.

In contrast to the excitement of the renewal activities, bond issuance remains in a state of prolonged stagnation. The reason is that investors' confidence in the bond market has not been restored in the context of many issuing organizations facing difficulties in business and cash flow, leading to delayed payments of principal and interest.

In the second quarter, 29 corporate bond lots were successfully issued with a total value of VND19,281 billion, down 83% compared to the same period last year. In the first 6 months of the year, the total issuance value reached about VND48,687 billion. Real estate is the group with the largest issuance proportion at nearly 35%, followed by banking at 29%.

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