Pressure to repay corporate bonds remains high

Businesses are facing more than VND20,000 billion in bonds maturing in the last month of the year and preparing hundreds of thousands of billions of VND for next year.

A recent report by VNDirect shows that the pressure on individual corporate bonds maturing increased again in the last month of the year. This unit estimated that there were about VND20,200 billion worth of bonds maturing, significantly higher than the previous two months.

Next year, debt repayment pressure will ease in the first two months of the year, then quickly increase. By April 2024, the value of corporate bonds maturing is forecast to reach nearly VND34,500 billion.

"The pressure on maturing bonds remains high" is also the assessment of investment consulting firm FIDT. The research department of this unit measured that in 2024, there will be more than VND297,000 billion of bonds maturing. This is a record level in many years, 3 times higher than in 2020. By 2025, this number will be about VND270,000 billion, lower than in 2024 but still significantly larger than in previous years.

The real estate sector will account for the highest proportion next year with more than VND123,000 billion worth of maturing bonds. "It can be said that maturity pressure is still surrounding this sector in the context of a still gloomy market," the report stated.

Meanwhile, early repurchase activities are decreasing. VNDirect reported that in November, there was only nearly VND5,000 billion, down 72% compared to the previous month. This level is also among the lowest in the past two years.

This can be explained by the fact that many businesses are facing difficulties in their business and cash flow. In particular, real estate - the group that mobilizes the most capital through bonds - has not yet "unfrozen".

According to credit rating agency VIS Rating, along with construction, real estate businesses generally have weak financial health, reflected by high financial leverage and low cash reserves. The debt to earnings before tax, depreciation and interest (EBITDA) ratio of real estate businesses issuing bonds as of the third quarter was 10.2 times - the highest among the industries.

Anticipating future debt repayment pressure, businesses have proactively negotiated with bondholders. In November, negotiations to change the terms and conditions of bonds were assessed by VNDirect to be positive. As of November 27, the Hanoi Stock Exchange (HNX) announced that about 64 units had reached debt deferral agreements with a total value of more than VND111,000 billion.

In the first half of December alone, VnExpress counted 8 businesses reaching agreements to change the terms and conditions of 9 bond lots. In addition to extension, businesses also chose to ask for interest rate reduction, change the interest payment period, and extend the principal payment schedule, with a total value of more than 8,100 billion VND.

Not only supported by bondholders, according to VIS Rating, businesses themselves have also improved their debt repayment ability thanks to the recovery of business activities, bringing in cash flow and access to new financial sources. As a result, the number of newly issued bonds with potential risks and the rate of bad debt formation at banks will slow down from next year.

Siddhartha