Many businesses continue to delay paying interest and principal
After a fairly "peaceful" September, the story of late payment of principal and interest on maturing bonds returned to the same level as before for real estate businesses in October.
For example, Dien Vi Investment and Real Estate Company Limited is late in paying principal/interest on bond lot DVRCH2124001 with an issuance value of 300 billion VND, maturing on October 1, 2024. The company has been late in paying interest on this bond lot since November 2023 until now.
S - Vietnam Real Estate Trading Joint Stock Company (S - Vietnam Real Estate) issued SVNCH2124001 bonds worth VND 2,500 billion, with a term of 3 years in October 2021. On October 8, 2024, the company announced late payment of nearly VND 158 billion in interest and VND 2,500 billion in bond principal due to not being able to arrange payment sources in time.
According to an updated report from VNDirect Securities Company, the negotiation activities to extend the bond term between issuers and bondholders are still active in the third quarter of 2024. As of October 15, more than 100 issuers have reached agreements to extend the bond term with bondholders and have officially reported to HNX. The total value of bonds with extended terms is more than VND 156,000 billion. Of which, the total value of bonds with maturity in 2024 that have been extended is more than VND 58,700 billion, accounting for 37.6% of the total value of bonds with extended terms.
However, more than 80 enterprises are on the list of late payment obligations for interest or principal of corporate bonds according to the announcement of HNX. The principal amount due in the third quarter of the late payment issuers is about more than 8,600 billion VND.
The total principal amount due in the third quarter of 2024 of late-paying issuers and the value of bonds maturing in the third quarter of 2024 that have had their terms extended is approximately more than VND 21,700 billion.
Pressure is mounting
Analysts at VNDirect Securities Company believe that the maturity pressure will increase sharply again in the fourth quarter of 2024 with an estimated 76,700 billion VND of individual corporate bonds maturing. The real estate group is the group with the largest proportion, accounting for 35.8% of the total value of bonds maturing in the fourth quarter of 2024.
Looking at the reported figures, the story of real estate bond maturity pressure is extremely large and risky in the context of the operating cash flow as well as the business results of this group still unable to recover.
According to analysts, if only a portion of this debt becomes bad debt and becomes illiquid, it will immediately cause serious impacts on the system's liquidity. In addition, Circular 02 on debt restructuring expires at the end of this year, creating great pressure to repay debts for businesses, especially for the real estate group. As for banks, the expiration of Circular 02 will make it difficult for banks to handle bad debts. The above information will have a certain impact on the banking and real estate groups as investors will be concerned about the prospects of these two groups.
From a more optimistic perspective, Dr. Nguyen Duy Phuong, Investment Director of DG Capital, said that the risk of bond maturity is always present, but the pressure has decreased significantly compared to the period of 2022 - 2023. The real estate market is showing some signs of warming up recently, along with that, the interest rate level is being maintained at a low level by the State Bank and the Government, so it is expected that good investors will soon overcome the difficult period.
"For the banking group, I think the impact from the expiration of Circular 02 is not too big because banks have proactively increased bad debt provisions since the beginning of the year. In addition, the health of the economy is gradually recovering, thereby reducing pressure on the balance sheets of banks," said Dr. Phuong.
