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Delays loom for trillions of đồng in bond payments in June
A total of 41 bond codes issued by 34 organisations, with a combined value of VNĐ23 trillion (US$4.1 billion), were set to mature in June.
Novaland's projects in HCM City. Photo tapchicongthuong.vn
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Around VNĐ6.9 trillion of these bonds, accounting for 30 per cent, face potential risks of delayed principal and interest repayment, according to VIS Rating estimates.
Among the risky bonds, VNĐ5.8 trillion is attributed to DCT Partners Vietnam Co Ltd, Ngọc Minh Investment and Real Estate Co Ltd, Novaland and Hưng Thịnh Land. These companies had a history of late interest payments in 2023, indicating potential cash flow challenges, said VIS Rating.
DCT Partners Vietnam holds the largest portion with VNĐ2 trillion worth of bonds, issued on June 28, 2021, maturing on June 28, 2024, with a fixed interest rate of 10 per cent per annum.
The company issued bonds with the aim of investing in the construction and development of many projects, including the Thiên Bình Minh - Hồ Tràm Tourist Area project, led by Thiên BÌnh Minh JSC, in Bà Rịa - Vũng Tàu Province.
The collateral for this bond comprises assets owned by DCT Partners Vietnam and Thiên Bình Minh, including land use rights, apartment ownership rights, receivables from apartment purchase contracts and future construction works within the Sóng Thần high-rise complex project. It also includes land use rights and future construction works within the Thiên Bình Minh - Hồ Tràm Tourism Area project.
In April 2023, DCT Partners Vietnam agreed with bondholders to increase the interest rate of bond DCTCH2124001 from 10 per cent to 12.3 per cent from June 28, 2022, to June 28, 2023. The remaining interest periods maintained a fixed rate of 10 per cent.
Last year, it faced a delay in repaying bond interest, spending VNĐ246.25 billion. The delay was attributed to credit tightening regulations affecting customer payments.
As of the end of 2023, DCT Partners Vietnam's equity reached VNĐ675 billion, with a debt-to-equity ratio of four times. The company recorded a net profit of VNĐ8 billion in 2023, resulting in a low return on equity (ROE) of 1 per cent.
Ngọc Minh Real Estate issued Ngocminh2019 bonds on June 28, 2019, with a total value of VNĐ1.3 trillion. Currently, VNĐ750 billion worth of bonds are in circulation, carrying an interest rate of 11.8 per cent per annum. Originally set to mature on December 31, 2023, the bonds were extended to June 28, 2024, due to payment difficulties caused by a lack of funds.
In 2023, Ngọc Minh Real Estate faced delays in making four bond interest payments due to capital constraints.
Its latest financial report for 2023 showed a net loss of VNĐ114.6 billion, compared to a loss of VNĐ81.7 billion in 2022.
The company had negative equity of VNĐ51.2 billion by the end of 2023, with a high debt-to-equity ratio of 31.3 times and a bond debt-to-equity ratio of 14.6 times, corresponding to a bond debt of VNĐ750 billion.
New cases arise
New cases of delayed principal/interest payments may occur due to declining business performance and credit difficulties.
Among the bonds at risk in June, there are VNĐ1.1 trillion worth of bonds issued by residential real estate developers. These issuers have consistently low or negative earnings before interest, taxes, depreciation and amortisation (EBITDA) margins over the past three years, with limited funds available for timely debt repayment.
In June, some companies with maturing bonds include Cát Liên Hoa Real Estate Development Co Ltd (VNĐ310 billion), Hoàng Cát Real Estate Co Ltd (VNĐ300 billion), Industrial Investment and Development Corporation (VNĐ500 billion), Big Gain Investment LLC (VNĐ1 trillion), Vinh Xuân Real Estate LLC (VNĐ300 billion), Bình Dương Home Development and Investment Corporation (VNĐ500 billion) and HTL Vietnam Real Estate Business and Construction Investment (VNĐ800 billion).
Of which, Big Gain Investment issued four bonds with a maturity term of 3-4 years. BGICH2124001 bond worth VNĐ1 trillion matures on June 23, BGICH2124002 bond worth VNĐ1 trillion matures on July 30 and the remaining two bonds worth VNĐ1.9 trillion mature in the third quarter of 2025.
Recently, Big Gain Investment made an unusual announcement regarding the repayment of bond principal/interest with alternative assets in the mid of May.
If the bondholders do not agree with the proposed repayment plan, Big Gain Investment will negotiate a cash payment arrangement.
The proposed schedule includes a 5 per cent late payment on the tenth business day after receiving the bondholders' valid payment agreement, a 5 per cent principal payment after 12 months from the bond maturity date and a 90 per cent payment after 24 months from the bond maturity date.
According to VIS Rating, within the next 12 months, approximately 19 per cent of circulating bonds with a total value of VNĐ216 trillion will mature.
It is expected that 9 per cent of these bonds, primarily in the residential real estate and construction sectors, pose a higher risk of delayed payment.
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