Accurately valuing real estate to repay bondholders is always a difficult problem.
Recently, the Ministry of Finance submitted to the Government to stipulate that in case it is impossible to pay the principal and interest of a bond in cash, it can negotiate with investors to pay with other assets. In which, it is possible to pay for bonds with real estate.
According to Lawyer Truong Thanh Duc, allowing bondholders to convert bonds into real estate is also reasonable in the context of the current difficult corporate bond market. It helps issuers to solve problems when bond debt matures. Especially businesses with complete capabilities, brands and projects.
Since this is a trade-off problem, it depends on the agreement between the creditor and the debtor. For bondholders, they have to find out if the project has been completed or not, and have legal documents to make this swap. Meanwhile, the issuer needs to convince the bondholders and get their consent to be able to perform the swap.
Dr Dinh Trong Thinh, an economist, said that the proposed solution to swap bonds for real estate would create opportunities for people to buy houses at cheaper prices than the market, and at the same time prove Bond issuers have assets to secure, helping people feel more secure when investing.
According to experts, paying bonds into real estate is not easy. Because there are thousands of bondholders with different needs and decisions, the issuer cannot quickly negotiate with these bondholders.
For example, to pay off a bond with an apartment, what valuation is reasonable for the bondholder to agree to. Usually the value of the apartment is also much larger than the bond value of the bondholder. So it is necessary to convince many bondholders to cooperate to accept.
Also not excluded, issuers will tend to push real estate values up very high to offset debt thereby, continuing to create a wave of house price increases.