Real estate businesses are actively racing to resolve bond debt in hopes of unlocking new opportunities. Many bondholders who experienced payment delays between 2022 and 2024 have chosen to restructure their debt rather than seize collateral.

Early repayment In late December, Hoang Anh Gia Lai JSC (HOSE: HAG) grabbed attention with a series of announcements about repaying the principal and interest on its HAGLBOND16.26 bond. The company paid VND1,043 billion, reducing the outstanding principal to VND753 billion. This significant repayment was funded by Hoang Anh Gia Lai Agricultural JSC (UPCoM: HNG). HNG reported completing a VND4,228 billion payment under a tripartite agreement with BIDV and HAG, allocating VND2,314 billion toward the bond repayment. HNG, previously part of HAG’s portfolio, was acquired by Thaco Group through a strategic partnership established in 2018. HAG expects to clear the remaining principal in the second quarter of 2025, citing “difficulties in liquidating non-performing assets” as the cause of the delay. At the company’s shareholder meeting last year, HAG’s chairman, Doan Nguyen Duc, expressed confidence that all bond obligations to BIDV would be fully settled by 2026. As of September 2024, HAG still owed VND7,300 billion out of VND13,500 billion in total payables. Following its recent repayment, HAG has impressively cleared over VND22,000 billion in debt since its peak in Q4 2016, according to VIS Securities Company estimates. Another notable case is No Va Land Investment Group Corporation (Novaland), a major developer addressing financial pressures and legal challenges. In late December 2024, Novaland’s board approved a resolution to lower the conversion price for a US$300 million bond from VND40,000 per share, set in July 2023, to VND36,000 per share under a restructuring agreement. Additionally, Novaland announced plans to repurchase all 21 bond codes issued since 2020, totaling VND7,000 billion in face value. The buyback, scheduled for January, will occur through negotiated agreements, including accrued interest in the purchase price. In a strategic move to restructure assets, Novaland has also reduced ownership stakes in several projects. This includes a significant decrease in capital contribution to Tan Kim Yen Real Estate Investment Company in HCMC, dropping from over VND2,200 billion to just under VND205 billion. These adjustments are seen as indirect asset sales, though the buyers remain undisclosed. A report by VIS Ratings underscores a trend among bondholders facing delayed payments on secured bonds: most prefer to restructure debt by extending deadlines rather than liquidating collateral. This trend highlights ongoing efforts to stabilize the market while avoiding the challenges of selling real estate or shares in a downturn. These proactive measures hint at a more optimistic future for the real estate market, yet caution persists within the capital market. “Investors remain cautious about real estate bond risks, favoring shorter issuance terms and demanding higher interest rates, despite the stabilization of base lending rates over the past two years,” FiinRatings observed in a recent report. FiinRatings noted that 27 companies successfully raised capital through corporate bond sales last year. The average maturity of short-term bonds declined to 2.64 years, down from 3.72 years in 2023, while the average nominal coupon rate increased to 11.07%, up from 10.46% the previous year. Data from the Vietnam Bond Market Association (VBMA) showed that issuers repurchased VND27,458 billion worth of bonds ahead of schedule in December, marking a 36% decrease compared to December 2023. This indicates a slowdown in bond buybacks. In 2025, an estimated VND216,670 billion worth of bonds will mature, with real estate bonds accounting for over 55% of this total. Shinhan Securities Company anticipates that bond repayments by listed companies in 2025 will remain relatively stable compared to 2024. However, with expected improvements in business performance, the risk levels tied to bond repayments are likely to decline compared to the past two years. A long road to recovery Signs of recovery in Vietnam’s real estate market emerged last year, with price increases and the revival of stalled projects offering a glimmer of hope. However, these improvements remain uneven, limited to specific segments and regions. A fourth-quarter 2024 survey conducted by the General Statistics Office of Vietnam highlighted persistent challenges in the construction sector. Key concerns include rising costs and a scarcity of new contracts, cited by nearly 45% of businesses. Cash flow issues also loom large, with 26.3% of firms reporting delayed payments and 21.8% experiencing capital shortages. Despite these hurdles, real estate companies actively pursued capital in the bond market. Data from the VBMA indicated that the sector issued nearly VND12,000 billion in bonds in December, accounting for 35% of the total market issuance. The corporate bond market is set for significant changes with the amended Law on Securities taking effect in early 2025. According to VIS Ratings, the new regulations aim to enhance transparency and curb high-risk bond trading by both issuers and individual investors. Companies with weak financials will face tighter restrictions on public bond offerings, including stricter debt-to-equity ratios, requirements for bondholder representatives, and mandatory credit ratings. In the latter half of 2024, several companies clashed with auditing firms over issues such as asset valuation, profit revaluation, and auditor suspensions. Notably, Novaland was forced to find a new auditor, while Hoang Anh Gia Lai (HAG), whose stock remains under warning, faced scrutiny over potential delisting due to persistent accumulated losses. Looking ahead, real estate companies must ensure meticulous financial reporting to rebuild investor confidence. For HAG, the goal is to eliminate accumulated losses entirely by 2025. “If positive results are achieved in the fourth quarter of 2024 and early 2025, HAG shares may be removed from warning status and regain eligibility for margin trading,” VIS Securities Company noted.