Vietnam's leading real estate developer Novaland has stricken deals with its bondholders to prolong payment terms as the government’s Decree 08, effective on March 5, allows corporate issuers to do so to help them ease cashflow troubles.
The Ho Chi Minh City-based company reached the agreements for two bond issuances worth VND1.75 trillion ($74.4 million), with BIDV Securities Company (BSC) and Petrovietnam Securities Inc. (PSI) as its representatives.
Under the deals, the first issuance, worth VND250 billion ($10.63 million) and represented by BSC, is converted from non-convertible and unsecured bonds to non-convertible bonds but secured by shares of Nova Consumer (HCMC Stock Exchange: NCG). The original payment deadline of April 26, 2024 is extended to March 10, 2025.
The second issuance, worth VND1,500 billion ($63.76 million) and represented by PSI, has its payment deadline extended by two years, until March 15, 2026.
Following the government’s Decree 08, some realty developers facing cashflow challenges have obtained prolonged payment terms for their issued bonds. Hung Thinh Land, also based in HCMC, is among them.
As many as 67 Vietnamese companies had failed to meet their bond payment obligations as of March 8, totaling VND89,300 billion ($3.79 billion) or 55% of their outstanding bonds, according to FiinRatings.
Financial experts and securities companies are of the view 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.