Corporates revive debenture issue plans

Sirote Vichayabhai, executive vice president and head of capital markets at Siam Commercial Bank, said yesterday that corporations that had suspended plans to issue debentures are coming back to the market after it stabilised.

The uncertainty in the tapering of quantitative easing (QE) over the past few months had caused many corporations to hold off fund-raising through debt instruments.

This is a good time to issue corporate debentures, especially if the US can extend the debt ceiling before the deadline next Thursday, he said.

The bank estimates that about Bt100 billion of bonds will be sold in the primary market in the rest of this year. Year to date, corporate bond issues have reached Bt350 billion.

Corporations that are laying plans to issue bonds want to secure funds to refinance debt and support expansion, he said.

SCB is among the seven underwriters of CP All’s issuance of secured debentures for 3, 5, 7, and 10 years.

Bangkok Bank, Krungthai Bank, SCB, HSBC and Standard Chartered (Thai) are the bookrunners, while Bank of Ayudhya and Thanachart Bank have joined them as underwriters. Subscriptions will be accepted from October 28-30.

CP All, which runs the 7-Eleven convenience-store chain, will issue up to Bt40 billion of secured debentures on October 31 to refinance a US$5.8 billion (Bt182 billion) bridge loan used recently to acquire shares in Siam Makro.

CP All’s shareholders have approved the Bt90 billion baht-denominated debentures.

CP All’s bond issue is the biggest this year, he added.

Good time for corporate bonds

Plakorn Wanglee, senior executive vice president of Standard Chartered (Thai), said the current market is a good opportunity for corporate bonds. Many corporations aim to issue fixed-income instruments before interest rates start trending up in the second half of next year.

"Our customers are planning to issue debentures to strengthen expansion for next year, which is a reflection that Thai fundamentals are strong even though we have been affected by external factors such as the QE tapering," he said.

Charnsak Fuangfu, senior executive vice president of Bangkok Bank, said there are still corporations with ambitious capital expenditure budgets such as auto parts, electronics and appliance makers. The auto industry is especially gung-ho, as the country targets to drive domestic sales to 3 million units over three years, while the second phase of the eco-car project will help support capital expenditure initiatives.

The private sector is adjusting to deal with the actual economic situation and GDP growth at 4 per cent. However, the bank believes that if public investment gets going next year, confidence among investors will also be restored.

Besides public investment, which is the hope of the economy next year, digital TV will be a new bait for private investment and a catalyst for demand for funds.