More than $1.7b worth of maturing corporate bonds rolled over

July 10, 2023 - 07:58

More than VNĐ42 trillion ($1.77 billion) worth of corporate bonds were rolled over in the second quarter, providing issuers, mostly property developers, much-needed breathing space amid the financial turmoil.

Novaland’s head office in HCM City’s District 1. The company has rolled over bonds worth VNĐ2.75 trillion maturing in the second quarter. VNS Photo Bồ Xuân Hiệp

HCM CITY — More than VNĐ42 trillion ($1.77 billion) worth of corporate bonds were rolled over in the second quarter, providing issuers, mostly property developers, much-needed breathing space amid the financial turmoil.

The extensions, ranging from one month to two years, will involve increasing the coupon rate by 0.5-3 percentage points from their original rates, according to stock brokerage VNDirect.

Phú Long Real Estate extended the maturity of its bonds worth VNĐ14 trillion by 12 months.

Sovico, a shareholder in Vietjet, has rolled over VNĐ9.6 trillion worth of bonds, maturing in May this year, by two years.

Novaland put off redemption of bonds worth VNĐ2.75 trillion, and Hưng Thịnh Land delayed repayment of VNĐ1.2 trillion by seven months.

The rollover is only a short-term solution, analysts pointed out.

Nevertheless, given the significant payment pressure faced by issuers in recent quarters, negotiating extensions is the best available option, they said.

In March the government issued a decree allowing issuers to roll over bond maturity by up to two years if investors agree.

If they do not, businesses need to fulfil their bond redemption obligations.

Issuers can also negotiate with bondholders to repay with other assets.

The corporate bond market experienced a surge in 2020 and 2021, with issuances rising to VNĐ462 trillion and VNĐ658 trillion, according to data from the Việt Nam Bond Market Association.

The boom was largely driven by increased capital demand from property developers and banks, but the property market collapsed and many issuers faced trouble following investigations into bond issuance and improper capital use by several large firms and related arrests in the middle of last year.

Many businesses, particularly property developers, were unable to meet their obligations as a result.

According to VNDirect, corporate bonds worth nearly VNĐ273 trillion will mature this year, mostly in the last two quarters.

Negotiating rollovers has thus become critical, it added. — VNS

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