Real estate developer Hung Thinh Land, which is facing cash flow challenges, has reached deals with its bondholders to extend payment terms, following the government’s Decree 08 which allows bond issuers to do so.
The new decree on corporate bonds, effective on March 5, permits issuers to extend payments by a maximum two years if the debt holders agree. If not, issuers need to negotiate to ensure their rights are fulfilled or go back to the original payment plan.
Based on the new rules, Ho Chi Minh City-headquartered Hung Thinh Land has secured such an extension for two issuances worth VND900 billion ($38.16 million).
For the VND400 billion ($16.96 million) issuance of the two, the company and bondholders on March 18 agreed to extend the payment term from 24 months to 30 months, setting the new deadline at September 19 this year.
However, the company shall make the payments several times before the new deadline if possible.
For the other issuance worth VND500 billion ($21.2 million), whose original payment deadline is this March 20, bondholders agreed to extend from 36 months to 43 months, meaning the new deadline is October 20, 2023. Similarly, the company shall make the payments several times before the new deadline if possible.
Most financial experts and securities companies said Decree 08 will have positive impacts on market sentiment, easing bond maturity pressure for issuers, especially real estate businesses in 2023-2024. However, this is only considered a temporary solution that gives issuing companies more time to restructure.
As many as 67 Vietnamese companies had failed to meet their bond payment obligations as of March 8, totalling VND89,300 billion ($3.79 billion) or 55% of their outstanding bonds, according to FiinRatings.
The repayment capabilities of those firms depend on their upcoming bond maturity, ability to raise capital from other sources, and cash flow from business activities, the leading Vietnamese credit rating agency.
The value of corporate bonds maturing in 2023 is estimated at VND235 trillion ($9.97 billion), including VND100 trillion ($4.24 billion) of bonds issued by real estate firms.
Up to VND36.2 trillion ($1.54 billion) of bonds is set to mature in the second quarter of this year and VND35.4 trillion ($1.5 billion) in the third quarter.