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More bond issuers face debt repayment woes

The Saigon Times

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HCMC – Many bond issuing companies are having difficulty settling debt as poor business conditions, tough access to credit and difficulties in raising funds from the stock market have heavily affected their cash flows.

Hung Thinh Incons JSC called for a delay in paying principal and interest for a bond lot worth VND300 billion that fell due on December 31, 2022.

In its debt settlement plan, January 3 was the date for paying the bond principal and interest. However, it managed to pay only VND90 billion last month due to financial hardships plaguing the company.

The firm suggested that it would settle the balance in March.

Earlier, some other firms insisted on late repayments of bonds worth a total of VND471.5 billion. They comprised Hoang Anh Gia Lai JSC, Trung Nam Corporation, Binh Dinh Investment and Development JSC, and Duc Viet Company.

The total outstanding value of corporate bonds by the end of January 2023 amounted to VND1,190 trillion, showed data from the VCBS Securities Company.

The real estate and banking sectors accounted for most of the amount, at 37% and 32%, respectively.

Bonds worth some VND250 trillion would fall due this year, way below the figure in the third quarter last year, due to businesses’ early redemption of bonds, which resulted from the Finance Ministry’s draft decree amending Decree 65/2020, VCBS said.

The draft decree aims to boost transparency in the corporate bond market, in which it orders debt-issuing organizations to refund buyers if they violate their debt sale plan, use proceeds from bond sales for any purposes other than intended, or break laws.

In addition, they must disclose information on solvency, audited financial statements, and audited plans to use proceeds from bond sales for the intended purposes before and after a bond sale.

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