Real estate businesses need to seriously consider selling off assets to have cash flow

Real estate businesses need to seriously consider selling off assets to have cash flow
Real estate businesses need to seriously consider selling off assets to have cash flow

(Dan Tri) – Vietnam Real Estate Brokers Association believes that real estate businesses need to take advantage of the bond extension period to restructure debts and seriously consider selling off assets.

Bond maturity pressure is still around

According to data from the Vietnam Bond Market Association (VBMA), accumulated in 10 months, the total value of corporate bond issuance was recorded at 209,150 billion VND. This shows that capital mobilization activities from the bond channel have improved compared to 2022.

Of which, the banking industry dominates with 99,023 billion VND (accounting for 47.3% of the total value). Next is the real estate group with 68,256 billion VND (accounting for 32.6%).

However, research by the Vietnam Association of Real Estate Brokers (VARS) shows that bond maturity pressure is still “surrounding” real estate businesses. The total value of newly issued and repurchased real estate bonds is still very low compared to the total value of corporate bonds due.

Accordingly, in 2022, real estate businesses will buy back about VND 219,000 billion. Accumulated in 10 months, businesses have bought back about 153,800 billion VND. Meanwhile, the total bond maturity value of the real estate group in the last 2 months of 2023 and 2024 will reach VND 15,600 billion and VND 121,100 billion, respectively.

The list of businesses that are slow to pay bond debt obligations increases day by day, especially in the real estate group. According to the Hanoi Stock Exchange, as of October 3, there were about 69 businesses on the list of delayed payments of interest or principal on corporate bonds with a total outstanding debt of about 176,100 billion VND, accounting for about 17.8% of outstanding corporate bond debt in the entire market.

Under the pressure of bond maturity, in order to have time to restructure cash flow and improve debt repayment ability, VARS believes that negotiating to extend time is the top choice of real estate businesses in a difficult context. access to credit capital flows, the market has not fully recovered. Renewal negotiations have been actively taking place with quite successful results since April.

According to the Hanoi Stock Exchange, as of October 3, more than 50 issuers have reached agreements to extend bond terms with a total value of more than 95,200 billion VND. Mainly, the maturity period is adjusted by 2 years, pushing back debt repayment pressure to the period 2025-2026.

VARS assesses that bond extension negotiations will still be a trend in the near future. However, difficulties still lie ahead. Extending the debt repayment period only helps businesses have time to stabilize production and business and restructure corporate debt to recover. It’s basically just moving from debt at one point to another.

Bond maturity pressure is still “surrounding” real estate businesses (Source: VARS).

To avoid facing the risk of default, businesses need to take advantage of this time to restructure debt. Must seriously consider selling off assets, even accepting a break-even or loss to have cash flow to repay debt and complete projects that can be liquidated as soon as they are launched on the market.

Besides, in addition to familiar financial sources (bank credits and corporate bonds), there needs to be mechanisms and policies to develop, attract, and ensure effective operation of capital sources from industrial products. other financial products (real estate investment funds – REIT, Housing Savings Fund, real estate securitization…), or other channels (foreign direct and indirect investment).

Let the corporate bond market develop

In the long term, corporate bonds are still an effective capital mobilization channel, demonstrating the dynamism of an economy, consistent with investors’ tendency to allocate assets to bonds. Compared to countries in the region such as Malaysia, Singapore, and Thailand, the scale of Vietnam’s corporate bond market is still very modest.

To add more space to the corporate bond market, businesses need to increase customer confidence. This is also the most important link for businesses to restructure debt.

In fact, in recent times, the efforts of State management agencies in correcting and stabilizing the operation of the corporate bond market, ensuring that the market operates safely, effectively, healthily and transparently, have been achieved. positive results.

Capital mobilization activities through bonds have been and continue to improve in both quality and quantity. Especially since the individual corporate bond trading system was officially listed on the Hanoi Stock Exchange on July 19, contributing to restoring investors’ confidence in a transparent and efficient market. than.

However, there is still a huge information gap between the market and investors. Vietnam only has very few organizations evaluating credit limits for bond issuing businesses. Meanwhile, not all corporate bond investors have the ability and time to evaluate the corporate financial situation and assess bond risks when deciding to invest.

To attract individual investors to participate in the corporate bond market and add more room to the market, VARS believes that State management agencies need to continue to improve the policy framework related to rating regulations. credibility for corporate bonds issued to the public to create risk prevention tools for investors.

In addition, the authorities, especially the Ministry of Finance and the State Securities Commission, need to devise an effective inspection mechanism for businesses issuing bonds right from the submission step, instead of issuing bonds. violations and cancellation of successfully issued deals, causing unnecessary psychological turmoil to the market.

The article is in Vietnamese

Tags: Real estate businesses selling assets cash flow


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