Real estate enterprises face the risk of corporate bond default

DNHN - According to the National Financial and Monetary Policy Advisory Council, the worrying slowdown of the real estate corporate bond market has prevented many projects from being implemented. A large number of real estate businesses may face the risk of defaulting on corporate bonds.

At the seminar: “Developing capital for real estate: Space and suggesting sustainable solutions”, the National Financial and Monetary Policy Advisory Council said that Vietnam and China have quite similar real estate markets, including houses, unfinished rental houses (raw construction) or land plots; only in Vietnam and China there is an additional type of capital from prepaid part of the customer.

However, “Must study seriously about the real estate market. Whenever the real estate market has problems, there are problems with real estate “bubbles”, especially house prices higher than 30 times the homebuyer's salary”.

Vietnam and China are both facing problems of oversupply, oversupply and lack of capital. Vietnam has an oversupply situation, a shortage of supply in some real estate segments, leading to no goods for sale, so the cash flow is negative. Many embankment projects have no money to deploy, no money for ground clearance...

The National Monetary and Financial Policy Advisory Council affirmed that the lack of supply is actually a lack of capital. Currently, Vietnam has a more serious problem that the long-standing capital flow for real estate is stagnating. Bonds are going up a bit but real estate bonds are quite quiet, especially July and August went down very seriously. Most bank collateral is real estate.

To solve this problem, the urgent solution is to build a solid and long-term legal basis for issuing corporate bonds. The second issue outside of the legal system is management experience, especially credit rating. By looking at countries around the world, investors, especially investors in the community, cannot look at the balance sheet, income statement, cash flow statement, etc. to make investment decisions. They are simply interested in how the business is ranked.

In order to be transparent in the capital market, all commercial banks must definitely rank the businesses they lend to, using financial and non-financial criteria to rank them.

It is estimated that from now to the end of the year, there will be about 112 trillion bonds maturing, not to mention the following years. Of the 1.4 million billion in bond debt, 700-800 trillion are from real estate businesses. The worrying slowdown of the real estate corporate bond market has made many projects not continue to be implemented, many businesses are unable to pay their bond outstanding due to maturity. In other words, a large part of real estate enterprises may face the risk of corporate bond default.

Encourage large enterprises to issue bonds. Real estate businesses with large bond balances and maturity in the next period need to quickly develop a payment plan, including boldly issuing new bonds or selling unfinished projects and assets... in order to maintain liquidity and overcome the immediate difficult period.

In order to open up capital for the real estate market, it is necessary to quickly amend Decree 153 to restore the corporate bond market, which is stalled due to procedures and declining investor confidence.

In addition, real estate businesses also need to quickly register for business ratings, which can be published or unpublished, it is important to create a transparent and professional premise to easily issue corporate bonds within the next few years.

P.V