Vietnam Allows Companies to Make Bond Payments With Other Assets

Vietnam said companies facing a liquidity crunch can use other assets to make principal and interest payments on bonds if their debtholders agree.

(Bloomberg) — Vietnam said companies facing a liquidity crunch can use other assets to make principal and interest payments on bonds if their debtholders agree.

The government did not specify which assets could be used to make payments. The changes are effective March 5, according to a statement on Sunday. The new regulation also allows companies to extend debt maturities as long as two years if approved by bondholders.

No Respite for Vietnam Developers With Debt Maturities Looming

For bondholders who do not agree to a change in terms and conditions, the issuers are responsible for negotiating to ensure the interests of investors. If a bondholder doesn’t accept the negotiation plan, the company must fulfill all obligations toward the bondholder according to the issuance plan announced to investors. That’s even if the new terms and conditions were approved by bondholders representing 65% of the debt in question, the government said.

The new decree postpones the implementation of a compulsory credit rating of bond issuers by a year to Jan. 1, 2024. A regulation limiting bond purchases to professional investors was also delayed by a year, as is a requirement on shortening a bond distribution period to 30 days from 90 days.

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