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Businesses buy back bonds before maturity, stock prices slide

Many stock prices have fallen after companies bought back bonds before maturity.

Ban Viet-VCSC Securities (VCI) has issued a resolution of the board of directors on buying back privately issued bonds, worth nearly VND400 billion, through direct negotiations with bond holders and making payment in VND.

Most of the bonds will mature in 2023 and will be bought back in November and December 2022.

VCI is one of many enterprises that have decided to buy back bonds ahead of time amid the tough market caused by violations committed by Tan Hoang Minh and Van Thinh Phat.

The confidence in the market has decreased and new capital mobilization activities have also declined as pressure has increased on many issuers. 

Buyback activities have soared with a total value of up to VND152 trillion in the first 11 months of 2022, an increase of 50 percent over the same period last year.

After information about bond buyback was released, the shares of many issuance companies started sliding.

After releasing information about the buyback on November 10, VCI shares saw prices falling to floor prices over the last four trading sessions with a huge selling surplus, from VND23,500 per share to VND17,700 per share on November 15 closing.

Prior to that, VCI prices saw a sharp fall from VND60,000 earlier this year to VND24,000 amid the market decrease.

DIC Corp (DIG) owned by Nguyen Thien Tuan on November 11 sent a document to SSC and HOSE about the company’s decision to buy back VND1.6 trillion worth of bonds prematurely from HDBank bond holders.

The money used for the buyback is from capital for production and business and other sources.

Prior to that, DIG faced difficulties because of the forced sale of tens of millions of shares and it had to complete more assets to guarantee shares of 80 real estate products in Dong Nai. 

However, investors are worried that the enterprise may face difficulties in cash flow.

Many enterprises recently have had to get money to buy back hundreds or thousands of billions of dong worth of bonds, such as AnGia Real Estate, Hoang Anh Gia Lai, REE, Gelex, Yamagata, An Phat Finance, Techcombank Securities, OCB, Tan Viet Securities, Hung Thinh Land and Gotec Land.

In some cases, enterprises must buy back bonds because of bonds used for wrong purposes. However, there are other reasons, such as investors wanting to sell before maturity and enterprises wanting to avoid bad rumors about their prospects.

Manh Ha

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