FDI

Vietnamese real estate faces difficulties when Novaland struggles with creditors

Trường Lăng

October 4, 2023

FDI

Vietnamese real estate faces difficulties when Novaland struggles with creditors

Trường Lăng

October 4, 2023

Vietnam’s real estate market is still in disarray as creditors and Novaland Investment Group Corporation are at odds over Novaland’s failure to pay interest on bonds totaling $300 million.

On Tuesday, Novaland stated that it is dedicated to settling the dispute with holders of its 2026 overseas convertible bonds in a “spirit of cooperation, to find an optimal solution to protect bondholders’ benefits.”

novaland
Source: Internet

The announcement came a day after a special group of bondholders criticized Novaland of wasting time and urged Novaland to reach an agreement so that international investors’ faith in Vietnam is not harmed.

Novaland is one of Vietnam’s largest real estate developers, and it has become a famous example of real estate businesses in Vietnam being sluggish to pay bonds, at a time when China’s real estate crisis is also worsening.

This Southeast Asian country’s real estate sector is under pressure after the government tightened regulations on debt issuing in response to allegations of illegal issuance activities. Novaland failed to make interest payments on its foreign convertible debt due in July and is also attempting to prolong the maturity of other notes.

“Novaland has proposed and is currently negotiating a debt restructuring plan appropriate to the company’s current financial capacity and business recovery progress,” according to the announcement.

Lower interest rates, recently approved projects, and improved buyer mood, according to Troy Griffiths, Deputy Managing Director of Savills Vietnam Company, could bolster the real estate market.

According to data collated by Bloomberg, the 2026 dollar convertible bonds issued by Novaland were trading on Tuesday at a tight 30 cents per bond dollar. The market price of this company’s shares has likewise dropped by around 26% this month.

Source: Bloomberg

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