- No Va Land fires staff, parent seeks urgent asset sales
- Shares down by 40% since the start of the year
- Company is top issuer of corporate bonds among property firms
- Vietnam property, credit markets in turmoil
- Adds fresh market data, unsuccessful bond sale
Vietnam’s second-biggest listed developer, No Va Land, is firing staff and seeking urgent asset sales, company and industry sources said, as it struggles to pay creditors in the latest sign of distress in the real estate sector.
The distress signals come amid turmoil in Vietnam’s property and credit market, heightened by the arrests of bosses of suspected of wrongdoing and a rapid fall in the value of the dong currency, after the central bank relaxed its dollar peg.
No Va Land has been the biggest issuer of corporate bonds among Vietnam’s property firms this year, says industry body the Vietnam Bond Market Association, placing debt worth 9,857 billion dong ($396.3 million).
Two sources with direct knowledge of the matter told Reuters parties linked to the ecosystem of Novagroup, the parent company of No Va Land, were trying to sell distressed assets to help it raise cash to pay back loans and fund operations.
The sources declined to be identified as the matter is sensitive.
No Va Land did not immediately respond to an emailed request for comment.
It share price was down nearly 7% by midday on Monday, making it one of the worst performers in the Vietnam index, which was down 2.2% by 0930 GMT.
Trading has nearly stopped, data from Hochiminh Stock Exchange shows, with just 17,600 shares of the company changing hands by midday, the lowest volume in a year.
No Va Land has lost nearly 40% since the beginning of this year, reaching its lowest since April 2021.
On Monday the Hanoi Stock Exchange said a one-year bond offering from Sept 30 worth 1 trillion dong by Nova Saigon Royal, a unit of No Va Land, was not successful.
The liquidity squeeze follows a crackdown by authorities on the market for privately placed corporate bonds.
Real estate firms have widely used these as an alternative source of cash after a tightening in lending conditions since the middle of this year.
“Debts are coming due this year-end and, with the current tightening regulations on loans given to real estate firms, it’s hard for the company to have cash,” one of the sources said.
‘IT HURTS’
During the past month, the company has laid off about half of its workforce, and most construction has been put on halt, three sources said.
On Monday, No Va Land chairman Bui Xuan Huy told state-run newspaper Tuoi Tre that market developments were unfavourable, and that the company had been forced to cut staff.
“It hurts,” he said, adding: “We hope the State Bank of Vietnam will work out measures to help real estate developers and investors to have access to credit.”
On Sunday Vietnam’s central bank said it had held meetings with commercial banks and offered liquidity support to those in need, confirming a Reuters report from last week.
The central bank has asked the company to redeem some of its corporate bonds because they had been missold to investors without proper information about the risks, a third source said, aggravating its liquidity woes.
No Va Land’s dollar-denominated debt, a small portion of its total bonds, has come under pressure in recent sessions, and prices for a $300-million convertible bond due in July 2026 have dropped sharply to 81.59 cents on the dollar.
Founded in 2007, No Va Land is active mostly in residential property and luxury resorts. It has a market capitalisation of $4.7 billion, after Vingroup’s real estate unit, Vinhomes .
Last month No Va Land posted a net profit of about 2 trillion dong, down 19% on the year because of higher expenses caused by the stronger dollar, company filings show.
Demand in Vietnam’s real estate market is expected to stay strong through 2023, rating agency Moody’s said in late August.
A fourth source, a supplier for one of No Va Land’s projects, said his raw materials, worth 200 billion dong ($8 million), were stuck as the project was being put on hold.
No Va Land plans to meet creditors on Monday to negotiate further loans, said a fifth source familiar with the matter. ($1=24,870.0000 dong)
@ Reuters