© Reuters. A motorbike passes Vietnamese real estate giant No Va Land Gallery in Hanoi, Vietnam May 23, 2023. REUTERS/Francesco Guarascio
By Phuong Nguyen and Francesco Guarascio
HANOI (Reuters) – Vietnamese real estate giant No Va Land Investment Group Corp is in talks with creditors to restructure part of its $1 billion foreign debt, according to two people familiar with the matter, amid turmoil in one of the main industries of the country.
Those creditors include Credit Suisse, according to one of the people.
The country’s fifth-largest developer by market value has been hit hard by the property sector ravaged by a government crackdown on corruption and tougher rules on issuing and refinancing corporate bonds. This led to a credit crunch, while businesses also had to deal with a surplus of high-end goods.
So far this year, No Va Land has missed payments on three of its national bonds and faces new repayment obligations worth about 14 trillion dong ($597 million) on more than 30 bond tranches. Last month, its auditor, PwC, expressed “significant doubt” about its ability to “operate continuously”.
To reduce the pressure of repayments, the company is trying to negotiate agreements with foreign creditors, according to locals. They declined to be identified because the information was not public.
No Va Land’s total exposure to foreign creditors stood at around $1 billion at the end of last year, comprising bonds as well as short-term and long-term loans, according to one of the sources.
The company has reached agreements with some creditors and is considering options to restructure other parts of its external debt, the source said.
The second person said talks are underway with Credit Suisse and at least one other creditor.
Credit Suisse, which arranged part of No Va Land’s bond issue, has committed loans worth about $55 million, according to the Vietnamese company’s financial statements. The bank also co-arranged a syndicated loan worth approximately $81 million with a $250 million credit facility.
Credit Suisse declined to comment. No Va Land, currently valued at around $1.1 billion after its shares have fallen 83% in the past 12 months, did not respond to a Reuters request for comment.
Among its main foreign creditors is Warburg Pincus, which invested $250 million last June. Nova Land has agreed to convert $200 million into shares of its subsidiaries, according to one of the sources.
Warburg declined to comment.
Another big creditor is Seatown Finance, controlled by Singaporean investment giant Temasek, which has provided around $100 million in loans, according to No Va Land’s financial statements.
Seatown did not respond to a request for comment.
One of the sources said No Va Land was looking to sell assets to pay off its debt, but a third source familiar with the matter said the company had struggled for months to find buyers.
No Va Land’s total debt, including domestic loans and bonds, is approximately $2.7 billion, or 24% of its assets.
($1 = 23,443.0000 dong)