HANOI : 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 country’s real estate sector.
The company’s stock price was down by nearly 7 per cent on Monday at 0400 GMT and has lost nearly 40 per cent since the beginning of this year, reaching its lowest level since April 2021.
Two sources with direct knowledge of the matter told Reuters the company was trying to sell distressed assets, including hotels and resorts, to raise cash to pay back loans and fund its operations. The sources declined to be named because of the sensitivity of the matter.
No Va Land did not immediately respond to an emailed request for comment.
The liquidity squeeze is the result of the authorities’ crackdown on the market for privately placed corporate bonds, which have been widely used as an alternative source of cash by real estate firms 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.
The company has been asked by Vietnam’s central bank 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.
Founded in 2007, No Va Land is active mostly in residential property and luxury resorts. It is Vietnam’s second-biggest listed property firm, with a market capitalisation of $4.7 billion, after Vingroup’s real estate unit Vinhomes.
No Va Land last month posted a net profit of about 2 trillion dong, down 19 per cent against the same period last year because of higher expenses caused by the stronger dollar, according to the company filings.
Demand in Vietnam’s real estate market is expected to stay strong through 2023, Moody’s said in a report in late August.
A fourth source, a supplier for one of No Va Land’s projects, said his 200 billion dong ($8 million) worth of raw materials were stuck as the project was being put on hold.
During the past month, the company has laid off about half of its workforce, and most of its ongoing 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 the company had been forced to cut staff.
($1 = 24,860.0000 dong)
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