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VND207 trillion worth of property bonds to fall due in 2023-2024

Bad debt in the real estate sector is projected to surge as property bonds worth over VND207.8 trillion will fall due in 2023 and 2024.
Buildings mushroom in HCM City – SGT Photo: Viet Dung

Analysts at SSI Research said in a recent report that in the second half of 2022, inflationary pressure and the central bank’s monetary tightening will make life tougher for the real estate market.

According to SSI Research, one-fourth of the total property bonds will reach their maturity this year, while the remaining 65% will fall due in 2023 and 2024, posing a high risk of an increase in bad debt at banks.

In 2022, bonds worth some VND144.5 trillion, 43% of which are real estate ones, will become due, according to a report released by the Ministry of Finance.

The figure will surge to VND271.4 trillion in 2023 and VND329.5 trillion in 2024. The total value of property bonds reaching their maturity during the period will be VND207.8 trillion.

The huge volume of property bonds nearing their maturity will affect firms’ payment capacity, leading to a potential surge in bad debt.

Statistics from the central bank indicated that outstanding loans in the property sector amounted to VND2,400 trillion, rising by 14.7% against the figure late last year and accounting for 20.7% of total outstanding loans, up 19.9% year-on-year.

Bad debt in the real estate industry stands at VND36.4 trillion, up 5% from last year.

According to FiinRatings, over the past five years, real estate developers have issued bonds worth VND100 trillion on average each year, while banks have bought a huge volume of these bonds. Meanwhile, the number of bonds that will fall due this year and next is huge. As such, if property firms fail to make payments closer to the maturity date, bad debt at banks would skyrocket.

Source: SGT

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