From August 1st, the 2023 Law on Real Estate Business will come into effect. One of the important contents of this law is the regulations on the capacity of investors in real estate projects.
Decree No. 96/2024, recently issued by the Government, which details and guides the implementation of several articles of the Law on Real Estate Business, has clarified this matter. Specifically, Articles 5 and 6 of Decree 96 provide detailed regulations on capital mobilization for project implementation and the equity capital of real estate enterprises.
Outstanding debt should not exceed 4-5.67 times equity.
Decree 96 stipulates that the ratio of outstanding credit and outstanding debt to equity of real estate businesses must meet three conditions.
Firstly, meet the financial safety ratios of the enterprise, complying with legal regulations on credit and corporate bonds.
Secondly, in cases where real estate businesses borrow from credit institutions or issue corporate bonds to implement real estate projects that have been approved by competent state agencies as the project's investor, they must ensure that the total outstanding debt from credit institutions, outstanding corporate bonds, and equity capital required for each project do not exceed 100% of the total investment capital of that project.
Thirdly, the total ratio of outstanding loans at credit institutions and outstanding corporate bonds for project implementation shall not exceed 4 times the equity capital of the enterprise for each real estate project with a land use scale of less than 20 hectares and not exceed 5.67 times the equity capital for each real estate project with a land use scale of 20 hectares or more.
Equity is based on the results of the audited financial statements or the results of the audited report on equity items for the year.
In cases where, at the time of the regulation, the enterprise does not have audited financial statements or audited equity reports, the audited financial statements or audited equity reports from the immediately preceding year shall be used.
For businesses established and operating for less than 12 months, equity is determined based on the contributed charter capital as stipulated by law.
A residential area in Hanoi (Photo: Tran Khang).
Late payments on corporate bonds continue to increase.
In a recent analysis report, VnDirect Securities assessed that although the real estate market has passed its bottom, it remains sluggish. Amidst ongoing difficulties, many issuers, particularly real estate companies, continue to face cash flow problems, leading to delays in fulfilling their due bond obligations.
As of July 15th, approximately over 80 businesses were on the list of those overdue in paying interest or principal on corporate bonds, according to the HNX announcement.
The total amount of principal debt due in the first six months of the year that was overdue and the value of bonds with maturing periods in the same six months that had their terms extended was approximately VND 43,500 billion, accounting for 43.5% of the total value maturing in the first half of the year, and 62% of the total value maturing when excluding the banking sector.
This unit estimates the total outstanding private bond debt of these 80 companies to be approximately VND 190,000 billion, accounting for about 18.7% of the total outstanding private corporate bond debt in the market. The majority of these issued bonds are from companies in the real estate sector.
Source: https://dantri.com.vn/bat-dong-san/doanh-nghiep-bat-dong-san-het-cua-phat-hanh-trai-phieu-o-at-20240805133132629.htm
