New debenture issues this year may drop by 2.7%: KBank
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Most debenture issues to replace those that expire
There will be fewer debenture issues this year than in 2014, largely because fewer existing debentures are due to expire, according to the head of Kasikornbank’s capital markets business division.
Thiti Tantikulanan forecasts new debenture issues this year worth about Bt551.5 billion, down 2.7 per cent from last year’s Bt566.9 billion. About Bt69 billion worth of this year’s debentures will be from clients that appoint Kasikornbank as their financial adviser.
Up to Bt230 billion of the Bt551.5-billion total will be to replace debentures that expire this year. Another Bt150 billion worth will be to raise funds for business expansion in this year, and the remaining Bt170 billion will be senior subordinated debentures for companies’ financial reserves, he said.
Return on investment from this year’s debentures will be about the same as last year as investors wait to see what will happen in the global financial market. The US Federal Reserve Bank has signalled that it will increase the benchmark interest rate, possibly midyear or in the second half.
Last year, debenture yields fluctuated as global markets fretted about whether the US would raise its interest rate. Thiti said this issue would continue to have an impact on yields this year.
“Most investors are concerned about capital outflows from emerging markets to the United States if the US central bank decides to increase the interest rate. As a result, most of them are still taking a wait-and-see stance,” he said.
The effects of this phenomenon
ill be seen globally, including in Thailand’s capital market, he added. However, he believes that if the Fed does adjust its benchmark rate, the increase will be no more than 0.5 percentage point from the current 0.25-per-cent level, so there will be little impact on the market.
