Phat Dat Real Estate JSC (PDR) has announced it has won approval from the State Securities Commission (SSC) to issue 67 million private shares at VND10,000 per share. 

The VND671.6 trillion of capital raised from the bond issuance will be used to repay the principal and interest of bonds it issued in 2021-2022 (seven lots of bonds).

Bond debt payments have been a difficult question for many institutions, including real estate firms, over the last two years.

Phat Dat’s third quarter financial report showed that its bond balance is VND980 billion, most of which will be due at year end. Paying interest for the bonds is a headache for the enterprise, which led to share prices sliding by 70-90 percent. The same is occurring with Novaland (NVL), Hai Phat (HPX), Khang Dien Housing (KDH) and DIC Corp (DIG). The serious problem is that shares are used as collateral for many enterprises’ loans. 

In the first half of 2023, Phat Dat had to extend the due dates of some lots of bonds and raise the promised interest rate from 12-13 percent to 15 percent.

In the first nine months of the year, PDR redeemed many lots of bonds with total value of VND1.5 trillion.

With the latest move, the real estate firm has paid off all bond debts

Recently, Vingroup, owned by the dollar billionaire Pham Nhat Vuong, has announced that the group has wrapped up the offer to sell $250 million worth of international bonds with interest rates of 9.5-10 percent per annum and quarterly payment.

The debt pressure has eased as the bonds issued by Vingroup are convertible to Vinhomes shares owned by Vingroup due in 2028. Vingroup plans to use a part of the mobilized capital to buy back existing bonds.

In mid-October, Vinhomes, a subsidiary of Vingroup, successfully issued VND5 trillion worth of 18-24-month private bonds, with guarantee and mortgaged assets. The interest rate of the lot of bonds is 12 percent per annum. 

Enterprises have and are going to buy back trillions of dong worth of bonds. According to the Hanoi Stock Exchange (HNX), in early October, Trung Nam Investment and Construction JSC consulted about a plan to buy back a lot of bonds worth VND2 trillion, which will reach maturity in April 2024.

Prior to that, because of financial difficulties, Trung Nam could not pay interest for bonds.

The Ministry of Finance reported that in the first seven months of the year, enterprises bought back VND135 trillion worth of bonds before the due date, an increase of 56 percent compared with the same period last year.

According to VNDirect, more than 50 bond issuers have successfully negotiated with bond holders about the payment term by early October (the total value of bonds is VND95.2 trillion).

Bond market getting warmer

The re-negotiating of bond debt payment extensions, issuing new bonds, issuing convertible bonds and issuing shares to mobilize capital for final settlement shows that enterprises have managed quickly and the market is getting stable.

The financial market recently has become more stable with high liquidity in the banking system, and sharp falls in deposit and lending interest rates.

The inter-bank interest rates have been decreasing with overnight interest rate once bottoming out at 0.1-0.15 percent per annum.

After the re-negotiations, bond issuers got consensus from bond holders to extend the debt payment deadline from several months to two years, and to raise the interest rates by 0.5-3 percent.

Many enterprises have issued new bonds, and both listed and unlisted real estate companies have issued bonds for project execution.

According to HNX, Thanh Xuan has VND600 billion worth of capital from the issuance of 83-month bonds at the interest rate of 10.57 percent, specifically issued to professional institutions. Thanh Xuan is the owner of Thanh Xuan Valley in Vinh Phuc province.

The bond issuance activities have recovered thanks to the increase in the value of bonds issued by commercial banks. The market has become warmer following the Ministry of Public Security’s notice that it has seized VND8.6 trillion in the case of Tan Hoang Minh and will give it back after the court makes a final judgment. 

Manh Ha