Challenges still exist when the real estate market records that many businesses have not been able to restructure their finances to pay the principal and interest of maturing bond packages.
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| Hung Thinh Land is having trouble with maturing bonds. |
Many businesses have to extend bond payments
Recently, Thu Do Securities Joint Stock Company issued a notice of violation of payment of 1,600 billion VND bond lot to Hung Thinh Quy Nhon Entertainment Services Joint Stock Company, due to failure to pay 70% of the remaining bond interest in the 9th interest period and 10% of the total bond interest in the 10th interest period.
Accordingly, this bond lot was issued on May 26, 2021, with a term of 48 months, i.e. the maturity date is May 26, 2025. However, this bond lot must mature on June 11, 2024 because the bond has experienced a default event.
But by this deadline, the issuer still could not pay, with the reason given being that the financial market and real estate market were not developing favorably, leading to the issuer not being able to arrange the funds in time to pay the bond interest on time compared to the plan.
Another company, Hung Thinh Land, is also having difficulty paying off its maturing bonds. The company recently announced a delay in paying principal and interest on bonds worth VND600 billion, issued on June 11, 2021, and due on June 11, 2024.
Hung Thinh Land said that due to unfavorable developments in the financial and real estate markets, the company was unable to arrange funds in time to pay the principal and interest of the bonds on time compared to the plan. Previously, this enterprise had 3 early repurchases of a portion of the bonds in May 2024, with a total value of 72.4 billion VND and still had 527.6 billion VND that could not be repurchased on time.
In November and December this year, Hung Thinh Land still has 8 bonds that will mature, with a total outstanding value of about 2,250 billion VND. Most of these bonds were partially bought back before maturity.
Along with Hung Thinh Land, other businesses such as DCT Partners Vietnam, Ngoc Minh Investment and Real Estate Company Limited, Novaland are being included in the list of companies with high-risk bonds by Vietnam Investment Rating Joint Stock Company (VIS Rating), with VND 5,800 billion that will be late in paying principal and interest in June 2024, due to weak cash flow and depleted cash resources.
The rate of corporate bonds with credit ratings is still low.
VIS Rating said that this month, 41 bonds from 34 issuers worth VND23,000 billion will mature. It is estimated that about VND6,900 billion, equivalent to 30%, are at risk of late principal/interest payments; VND1,100 billion of high-risk bonds, late for the first time, belong to issuers in the residential real estate sector. VIS Rating noted that these issuers have an average profit margin of less than 10% over the past 3 years, or even negative, and their funds to pay off due debts are exhausted.
According to VIS Rating, approximately 19% of outstanding bonds worth VND216 trillion will mature in the next 12 months. An estimated 9% of these are bonds with high risk of late payment, mainly in the residential real estate and construction sectors.
“Positive signs have appeared in the bond market as issuance activities have started to become active again. However, the market has not yet shown an improvement in confidence as the amount of corporate bonds with credit ratings is low,” VIS Rating commented.
According to the reporter of Investment Newspaper, in the face of difficult market developments, many enterprises have handled bond debt by negotiating with investors and bondholders to extend the bonds for a certain period of time, handling the collateral of the bonds for payment, exchanging bonds with other assets...
For example, Khai Hoan Land recently extended the bond term by 1 year after extending the term by 1 year in 2023. Specifically, Khai Hoan Land has just approved extending the term of bond code KHGH2123001 to April 5, 2025, adjusting the interest rate to 12%/year. As of the end of 2023, Khai Hoan Land has outstanding 3 bonds with a total face value of VND 840 billion.
The extension is considered a temporary solution, because negotiating an extension only delays the payment date and in many cases forces businesses to pay higher interest rates. In addition, the capital mobilized from corporate bonds will remain limited, mainly for large businesses with good reputation and clear legal collateral.
Source: https://baodautu.vn/trai-phieu-den-han-trieu-nang-doi-vai-doanh-nghiep-dia-oc-d218269.html
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