December is witnessing the redemption of approximately VND20.2 trillion (US$841.6 million) worth of corporate bonds, and the upcoming year anticipates the maturity of bonds worth hundreds of trillions.
According to a recent report from VNDirect Securities Corporation, there is a notable surge in redemption pressure this December compared to the previous two months. While a partial relief is expected in the initial two months of the next year, the pressure is set to rise rapidly again, with companies facing nearly VND34.5 trillion in payments by April.
Over the course of the year, the total redemption amount is projected to reach VND297 trillion, marking the highest figure in years and three times the 2020 total. Notably, property firms are expected to account for the largest share, totaling VND123 trillion.
Concurrently, premature redemption is on the decline, with VNDirect data indicating just VND5 trillion in November—down 72% from October and one of the lowest levels in the past two years. This trend is attributed to various sectors, especially property, experiencing a downturn and limited cash flows.
According to VIS Credit Rating Company Ltd., property development and construction firms often exhibit poor financial health, as evidenced by their high financial leverage and low cash reserves.
Property companies that issued bonds in the third quarter of this year demonstrated a debt-to-income ratio (before interest, taxes, depreciation, and amortization) of 10.2, the highest among industries.
In anticipation of future redemption pressure, companies are proactively engaging in negotiations with bondholders.
The Hanoi Stock Exchange reported that, as of November 27, 64 companies had successfully reached debt settlement agreements, totaling VND111 trillion worth of bonds.
Apart from extending maturity, businesses have been negotiating interest rate reductions, changes in interest payment terms, and extensions of the principal payment schedule for bonds amounting to a total of VND8.1 trillion.
VIS Rating highlighted that, in addition to bondholder support, businesses have enhanced their repayment capability due to improved business conditions, increased cash flows, and access to new financial sources.
