Corporate bond maturity remainingd high
The volume of corporate bonds maturing in 2024, though lower than that in 2023, is still at a high level, mostly in industries with payment risks such as real estate and renewable energy, according to a report by the Ministry of Finance (MOF).
The ministry said as of the end of 2023, the outstanding corporate bond debt stood at about VNĐ1 quadrillion (US$39.27 billion), issued by 432 businesses. The total value of bonds maturing in 2024 is VNĐ240.1 trillion ($9.43 billion), lower than the VNĐ261.6 trillion recorded last year.
Credit institutions had the largest outstanding bond debt by the end of 2023 with VNĐ357.2 trillion. The figure for real estate businesses was VNĐ351.4 trillion.
The volume of real estate corporate bonds due in 2024 is VNĐ99.6 trillion, issued by 92 organisations. The MOF forecast that there will be difficulties for a number of businesses in paying corporate bond debt worth about VNĐ35.8 trillion, accounting for 35.9 per cent of the volume of mature bonds of real estate businesses, and recommended real estate businesses continue to closely monitor their ability to repay bond debt.
Among the businesses facing difficulties, three companies are facing significant challenges in repaying bond debts (negative equity) totalling VNĐ4.6 trillion. These companies include Asia Tourism and Construction Investment Joint Stock Company, Nhật Quang Real Estate Development Joint Stock Company, and Smart Dragon Investment
Corporation.
Additionally, there are 18 companies classified by the Ministry of Finance as potentially encountering difficulties in debt repayment, with a combined value of VNĐ31.2 trillion due this year. These companies, such as Golden Hill Investment Corporation, Southern Star Investment and Urban Development Joint Stock Company, Lan Việt Real Estate Company Ltd, and An Nam Investment and Business JSC, are facing loss-making business results and debt-to-equity ratios of 3 times or higher.
Other companies in this category include An Khang Real Estate Development Limited Liability Company, Vạn Hương Investment and Tourism Joint Stock Company, Fuji Nutri Food SCJ, Phú Thịnh Phát Investment Co Ltd, Phú Thọ Land
JSC and City Aqua Co Ltd.
For the remaining group of businesses, the combined outstanding bond debt is about VNĐ300 trillion, accounting for 29.8 per cent of the total outstanding debt, for bonds issued by 222 businesses. Their maturity volume in 2024 is VNĐ87.3 trillion for bonds issued by 102 organisations.
According to the MOF, if interest rates will be maintained at the current low level, the capital mobilisation costs will be reduced, encouraging businesses to invest in business expansion, and improving their debt repayment ability. However, the ability of restoring production and ensuring debt repayment obligations depends on particular industry and economic situation at home and abroad, it said.