In 2022, the business sector continues to flock to issuing debentures. But how are the effects of various external factors driving interest rates “up”, how will this affect corporate bond issuance and are bonds still an attractive alternative?
As of May 2, 2022, from the beginning of the year until April 26, 2022, the Thai business sector has issued debentures totaling 390,486 million baht, or a total of 71 companies, which each issue has received a good response from investors. In 2021, a total of 1,035,614 million baht has been issued debentures, a total of 147 companies.
This year, still see many large companies and well-known conglomerates. Continuous offering of debentures for large companies or conglomerates The top 5 debentures issued at the beginning of the year led by
- True Move H Universal Communication Company Limited, which has issued debentures 35,000 million baht
- PTT Global Chemical Public Company Limited which has been released 30,000 million baht
- SCG Chemicals Co., Ltd. has left. 30,000 million baht
- Gulf Energy Development Public Company Limited has left. 24,000 million baht
- PTT Public Company Limited that has issued debentures 20,000 million baht
Incentive interest rates and new bond investment channels
The debentures of each company It has different interests. especially in terms of interest rate incentives. And more interesting is that this year, many companies have added new investment channels for investors. For example, the sale of debentures through a mobile banking application, such as Sansiri Public Company Limited, which sells debentures through the SCB EASY application.
In addition, there are also PTT Exploration and Production Public Company Limited and Minor International Public Company Limited that sell bonds through Krung Thai Bank’s “Pao Tang” application. which each received an enthusiastic response
The prospect of issuing debentures in the next phase
In the next period, many companies have announced that they are preparing to issue and offer debentures, for example:
- CP All Public Company Limited and IRPC Public Company Limited that prepares to sell debentures, 1 model, 5 years old, interest 3.10-3.25% per year, pay interest every 6 months, which will open for reservation through the application “Pao Tang”
- PTT Public Company Limited that prepares to sell debentures, 7-year model, interest at 3.25% per annum and payable every 6 months
- True Corporation Public Company Limited that prepares to sell 3-year debentures, interest 3.50% per annum, pay interest every 3 months
There are also a number of companies that are preparing to sell bonds to raise investment capital and offer high interest rates.
by “Sirinart Amorntham” Senior Director of Research Thai Bond Market Association Said that during May-June, almost 20 companies are registered with the Thai Bond Market Association (ThaiBma) in different ratings from AAA to Non. -rated includes the value now, some companies have already stated But the total amount is about 20 billion baht.
The association expects the full year of 2022 to reach 1 trillion baht. Which last year had a total issued value of 1.03 trillion baht, it was thought that it should not be too far from last year, or maybe even too much. Because this year’s maturity value is similar to last year. Therefore, about 60-70% of some issuers are issued for Roll-over, which is to replace the old, expired version, some companies will issue it to repay bank loans. including investment in business expansion
This year, the economic outlook is better than this year. The outlook for the COVID-19 situation It seems to be in control. and the economy will begin to recover Therefore, there is probably a need for private companies to raise funds. to expand the business or invest more than last year Therefore, as a whole, I think this year’s output value should not be less than last year or even increase.
While the interest rate trend has been clear since the beginning of the year. The US Federal Reserve (Fed) has already announced that this year will begin to raise interest rates. Including reducing the QT. Therefore, the impact is already seen to have a real impact. When the central bank raises interest rates, it is inevitable that it will put pressure on the Thai government bond yields. increased with But the Magnitude may not be the same. It’s not the same size but in the same direction.
For example, in Thailand, the 5-year and 10-year-old models, where the 10-year-old has increased by almost 1%, or in the 5-year-old, is about the same, which is about 95 bps. fundraising together Therefore, rising government bonds are part of the cost of borrowing or issuing corporate bonds. It is inevitable that the private sector will have higher borrowing costs or have a coupon for a higher interest rate. Followed by almost all credit ratings, almost 60-90 bps. Close to the increase in government bond rates.
“In terms of issuers, borrowing costs are higher. But in terms of investors, it’s good news. It’s good for him to have newer bonds that have come out with higher yields. But for investors who may have held and pending, it is not yet due. There may be a lost opportunity of receiving higher interest rates. The new bonds that come out. That one may be a lost opportunity, but at least if the company does not default. Investors hold until maturity, they will definitely get the principal amount,” said Ms. Sirinart.
Considered that investing in bonds Still another interesting option. For investors who do not want to risk too much
Read the original news: Businesses flock to issue debentures to lock costs. pay good interest New choice for investors
Source: ประชาชาติธุรกิจ by www.prachachat.net.
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