Bond debt restructuring: Businesses need the right "medicine"

The pressure on bond maturity is still high in the last months of 2025 and the period of 2026-2027. In addition to requesting debt extensions, many businesses have begun to increase the restructuring of bond debt with different options. In particular, some businesses have implemented the plan to issue shares to exchange for bond debt.

Speaking at the Bond Highlights newsletter - [Bond Highlights] No. 9/2025 , Ms. Nguyen Thu Binh, Acting Director of Risk Management, PVI Fund Management Company (PVI AM) said that this is one of the solutions to rebalance the balance sheet and "buy time", the effectiveness still depends on the internal strength of the enterprise, the level of dilution and transparency in valuation as well as implementation supervision.

On the issuer side, this option has the advantage of helping businesses reduce leverage, and for businesses with weak short-term cash flow, it can avoid falling into a state of "technical bankruptcy". Liquidity indicators are improved, rebalancing the balance sheet. However, there are also disadvantages such as the number of outstanding shares increases, EPS decreases, and equity is diluted. This option also needs to be approved by the General Meeting of Shareholders and competent authorities, along with independent valuation.

Since the beginning of the year, the Vietnamese stock market has grown strongly, and the stock prices of many businesses (including those in difficulty) have recovered significantly. Therefore, on the bondholder side, switching from the position of creditor to shareholder at a negotiated price can benefit if the business recovers. However, if the business has not dealt with the root of the difficulties, the bondholder will still only become a shareholder of a weak company.

From the perspective of existing shareholders, dilution creates immediate risks. However, Ms. Binh assessed that when this solution helps businesses stabilize cash flow and maintain operations, existing shareholders can also benefit in the long term.

Ms. Nguyen Thu Binh, Acting Director of Risk Management, PVI Fund Management Company (PVI AM). Photo: Chi Cuong

Assessing the upcoming period, PVI AM experts commented that the pressure to mature in the coming time is still quite large, but the current context is different from before.

Ms. Binh reiterated the maturity pressure and great risks of the market in the period of 2022-2023, the large amount of maturing bonds with the risk of late payment. However, from the second half of 2024 until now, this risk has no longer put too much pressure on the market thanks to two factors.

Firstly, capital mobilization conditions have improved, credit growth in the first 7 months of 2025 reached 9.64%, much higher than the same period in 2024, showing that businesses have easier access to bank loans, helping to increase the ability to restructure maturing debt.

Second, the risks have been identified early. Currently, about 40% of the matured bonds belong to the group that has been late in payment before, of which 70% are related to the Van Thinh Phat group, the rest mainly belong to Novaland and Hai Phat - units that have been restructuring their operations and debts. Therefore, the market has identified most of the risks, making it difficult to cause new shocks.

However, this expert also noted that although the current picture is less tense, the maturity volume is still quite significant. If many issuers restructure simultaneously but without standards, the market may face risks of stock dilution, reducing stock value and investor confidence.

When businesses abuse the right to extend the maturity or pay with poor quality assets, it will also undermine market discipline and spread financial risks to banks/securities companies that hold many bonds. At the same time, it will impact secondary liquidity.

“The current maturity risk has been identified and priced by the market, but in the 2025-2026 period, if restructuring plans lack transparency and standards, investor confidence may be eroded, causing negative impacts on the market,” said Ms. Thu Binh.

Finding an effective "medicine" for issuing organizations

Regarding solutions for issuers, Ms. Nguyen Thu Binh affirmed: There is no best “medicine” for all businesses. However, to maintain operational continuity, while ensuring the rights of bondholders and minimizing the dilution of existing shareholders’ rights, issuers can flexibly combine 4 groups of solutions.

The first is Conditional Debt Extension. The issuer can negotiate with the bondholder to extend the bond term within legal limits. According to Decree 08/2023/ND-CP, the issuer can extend for up to 2 years if approved by the bondholder.

The extension may be accompanied by conditions such as increasing interest rates to compensate for prolonged risks for investors, adding collateral or guarantee terms, tightening contract terms, etc. With this option, businesses have more time to restructure, bondholders still maintain their creditor position with reasonable compensation, reducing pressure to sell off bonds.

The second solution is to exchange bonds for shares or convertible bonds at independently priced market prices. This option helps reduce financial leverage quickly, while linking bondholder interests to the recovery of the business.

Another solution is that instead of cash, businesses can use highly liquid assets, such as real estate with completed legal documents, or financial assets for payment. However, it is mandatory that the assets be valued by an independent valuation organization and have clear legal documents with a legal warranty/guarantee mechanism for bondholders. On the contrary, if the assets are illiquid or have legal problems, the burden will be transferred from the business to the bondholders, eroding trust.

The remaining solution is Early Repurchase or Lot Swap. Enterprises can propose to buy back part or all of the bonds early with cash combined with hybrid instruments, thereby immediately reducing the amount of maturing bonds, diversifying maturity risks and taking advantage of bank liquidity - the group currently leading the primary market - to support debt restructuring swap transactions.

Ms. Thu Binh affirmed that an effective restructuring scenario for Vietnam needs to flexibly combine the four groups of solutions above, depending on the characteristics of each industry and the financial health of each enterprise.

The core point is that the solutions must be transparent in information, independently priced at every step, ensuring a balance of interests between businesses and investors while avoiding the case of "short-term rescue but long-term risks". Only when all the above factors are met at the same time, the bond debt restructuring process can both help businesses survive and strengthen the confidence of the capital market.

From the perspective of a fund management company, the Acting Director of Risk Management PVI AM also expects that market clearing solutions will be implemented more strongly, such as: Increasing safety standards for secured bonds, allowing the re-establishment of the asset management agency model to monitor, price and protect bondholders; Diversifying transaction structures, developing project bonds with locked sales cash flow, bonds secured by finished inventory, or corporate bonds with commitments to use free cash flow to repay debt early; Designing new fund products such as fixed maturity bond funds, 3-5 year closed-end funds for illiquid assets, green/infrastructure funds to attract long-term capital, etc.

Expanding long-term capital channels, mobilizing capital from insurance, pensions, and banks; utilizing fintech and ETF platforms to distribute bond fund products also need more attention. At the same time, upgrading infrastructure and data, digitizing mortgage records, standardizing information disclosure, and allowing electronic voting to make it easier for funds to evaluate and invest.

When the difficulties are resolved, new fund management companies can fully promote their role as medium- and long-term capital channels, helping the corporate bond market increase in both quantity and quality, providing a sustainable source of capital for businesses in the 2025-2027 period, Ms. Nguyen Thu Binh expected.

Source: https://baodautu.vn/tai-co-cau-no-trai-phieu-doanh-nghiep-can-lieu-thuoc-phu-hop-d395688.html