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Vietnam Property Debt Crisis Deepens as Major Developer Delays Bond Payment

23 February 2023, 3:35 pm


(Bloomberg) -- Vietnam’s property debt crisis is intensifying as the country’s second-largest developer joined the ranks of peers seeking debt extensions after failing to repay a bond on time.

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No Va Land Investment Group said earlier this week it will delay repayment of a 1 trillion dong ($42 million) note originally due on Feb. 12 and asked holders for an extension or to convert the principal into its real estate products. The developer said it’s seeking to work out a way within two months for it to pay off the debt.

Better known as Novaland, the company is the latest addition to an expanding group of Vietnamese developers that have become late on debt payment, indicating a widening cash crunch in the sector after an anti-graft campaign spooked investors and new bond issuance plunged. With billions of dollars of bonds due this year, the industry’s woes risk triggering a broader crisis for the nation’s banking sector and economy.

“We believe this is just the beginning, and expect more debt extensions, restructurings and defaults,” said Xavier Jean, an analyst at S&P Global Ratings. “We are also watching for contagion effect” that could spill over to companies beyond the construction sector, he said.