Vietnam property developers still struggling to repay debt: S&P

AGGREGATE residential sales in Vietnam are forecast to contract by 15 per cent to 20 per cent this year, following 25 per cent to 30 per cent growth last year, as property developers struggle to repay debt, S&P Global Ratings said on Thursday (Nov 2).

Strain in the property sector is spilling over to banks, it said in a note, adding that property exposures make up about 25 per cent of banks’ total loans.

Vietnam’s real estate sector has seen developers miss interest payments on debt, amid a credit crunch spurred by ill-timed government measures, with the sector being the worst performer in September on the falling Ho Chi Minh City stock exchange.

Vietnamese authorities have acted swiftly this year, with rate cuts, delayed loan payments and debt restructuring assistance, but “this will alleviate, but not eliminate, the fallout from the property sector on banks”, according to S&P Global Ratings.

“In a worst-case scenario, sector-wide non-performing loans would rise to about 4.5 per cent from 2.8 per cent as at March 2023,” it said. REUTERS