HANOI: Vietnam's listed property developers face increased pressure to pay their large debts as profits plunged and their cash reserves dropped to the lowest levels in over five years, a rating agency co-owned by Moody's said in a report.
The Southeast Asian country's real estate sector has seen in recent months developers miss interest payments on debt amid a credit crunch and oversupply of high-end properties that resembles the more acute troubles in neighbouring China.
"Debt servicing capacity for (the) majority of listed developers continued to deteriorate," said Vietnam Investors Service and Credit Rating Agency (VIS Rating) in a report released on Wednesday, which did not announce any credit rating action.
Listed developers, some of which are among companies with the largest market capitalisation on the Ho Chi Minh City stock exchange, face annual bond payments of around 114 trillion dong (US$4.70 billion) this year and next - equal to over 1.0 per cent of the country's gross domestic product.
Among them is embattled No Va Land, which has been discussing for months the possible restructuring of its debt with bondholders after it missed payments.
VIS Rating said debt ratios among listed developers deteriorated over the first nine months of the year because of weaker revenues, and cash resources fell to the lowest level over the last five years.
Access to finance has however improved thanks to the extension of new credit from banks, the agency noted.
In September, the Asian Development Bank warned of potential spillover into banking from the crisis in the real estate sector.
Low level of new property supply and slow recovery in homebuyers' sentiment will continue to dampen developer sales in the first half of 2024, the agency said, noting however that developers' performance was expected to gradually recover from the second half of next year. (US$1 = 24,250 dong) - Reuters