The volume of mature bonds of businesses will peak in 2023 - 2024 and bond issuers are taking different actions to proactively remove difficulties.

NoVa Real Estate Investment Group Joint Stock Company (Novaland, HOSE: NVL) has just announced that it has reached an agreement with its "bondholder" Dallas Vietnam Gamma Ltd. The companies have negotiated and reached an agreement to reduce the number of outstanding bonds and warrants through a swap agreement.

Accordingly, Dallas Vietnam Gamma Ltd will receive a portion of shares in two member companies of Novaland, namely Thanh Nhon Real Estate Investment Company Limited and Mui Ne General Investment Joint Stock Company in exchange for the cancellation of a corresponding number of bonds and warrants.

Previously, in mid-2022, Dallas Vietnam Gamma Ltd bought 4,435 convertible bonds and 185 warrant-linked bonds from Novaland. Novaland's consolidated financial statements for the fourth quarter of 2022 showed that Dallas Vietnam Gamma is Novaland's bondholder with a long-term debt of VND4.62 trillion (US$193 billion) as of December 31, 2022.

BCG Energy Joint Stock Company – a member of Bamboo Capital Group Joint Stock Company (HOSE: BCG) also recently said that it had reached an agreement with investor Hanwa Energy Corporation Singapore Pte Ltd on changing the bond payment term.

According to BCG Energy, considering changes in market conditions, the two parties have negotiated to convert part of the bonds into debt with the final payment term being changed to June 30, 2023, instead of September 4, 2022.

As of December 31, 2022, BCG Energy had paid all the interest and VND45 billion of the principal to Hanwa Energy Corporation Singapore Pte. The remaining principal debt, equivalent to $3 million, has been agreed by BCG Energy and Hanwha Energy to be settled under a joint agreement of both parties. Previously, on September 4, 2019, BCG Energy privately issued a convertible bond package to Hanwa Energy Corporation Singapore with a value of VND115.75 billion.

In addition to actively negotiating with lending partners, some businesses also actively increased coupon rates for bond lots to stabilise investor sentiment. In addition, many businesses also plan to repurchase the issued bonds before maturity.

According to a recent report by Vietcombank Securities Company (VCBS), by January 2023, out of VND1.19 quadrillion of corporate bond outstanding loans, the largest amount of outstanding loans belonged to the real estate industry which is accounting for 37 per cent, followed by banks making up 32 per cent.

VCBS also added that the volume of corporate bonds maturing in 2023 is estimated at over VND250 trillion, a significant decrease compared to the third quarter of 2022 due to the proactive repurchase by issuers before maturity. The acquisition value of the banking and real estate industries in the fourth quarter of 2022 reached VND35 trillion and VND24 trillion, respectively.

Experts from VNDirect Securities Joint Stock Company said that in the context of tightened monetary policy and increasing financial costs, some bond issuers have few opportunities to access capital for financial restructuring and meeting short-term debt obligations. Liquidity risk is concentrated in a number of volatile sectors such as real estate.

Can Van Luc, a member of the National Financial Monetary Policy Advisory Council, said that businesses need to step up negotiations with investors to extend the debt payment maturity.

The Ministry of Finance (MoF) has also recently proposed that the Government consider allowing enterprises to pay principal and interest on bonds in shares and real estate products.

According to the ministry, if an enterprise cannot pay the bond principal and interest in cash, they can negotiate with investors to use other assets on the principle of complying with the provisions of civil law. This payment method must be approved by the bondholders and the enterprise must disclose information and take responsibility for the legal status of the assets used to pay the principal and interest of the bonds.

To assist enterprises in mobilising capital for production and business activities and debt restructuring, the Ministry of Finance shall propose to the Government to allow previously issued bonds with an outstanding balance to be changed in expiration term, the maximum time is two years. — VNS