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Vietnamese property developer BIM Land Joint Stock Company (BIML) was downgraded to B3 from B2 and its dollar bonds were cut to Caa1 from B2, by Moody’s. It cited “weakened financial policies and increased governance risks following its tender offer”. Moody’s considers the transaction to be a distressed exchange or “a form of default” with it leading to substantial losses for bondholders. BIM accepted tenders worth $99mn for its $200mn 7.375% dollar bond due 2026 at an average price of 63% of par. This was a significant increase to its initial plan of buying back up to $48mn of its notes. The downgrade of its dollar bonds reflects bondholders’ “exposure to legal subordination given the large proportion of secured debt” in its capital structure. Moody’s also expects that BIM will have to rely on secured borrowings to fund its operations.
BIM Land’s 7.375% 2026s were up 0.9 points to 71 cents on the dollar, yielding 22.37%. The notes rallied by over 8 points last week after the IFC was said to be planning to invest up to $150mn in BIM’s sustainability-linked bonds