thailand
BANGKOK: The number of Thai corporate borrowers issuing new bonds may surge 15% this year to topple a near decade high in 2015, particularly small and medium-sized companies with problems getting loans from banks.
Banks have tightened lending to contain their bad-loans portfolios at a time of slow economic growth. Thailand's stock market has also fallen, making initial public offerings an unattractive fund-raising avenue.
"Companies of relatively medium size should be major issuers like last year," said Ariya Tiranaprakit, executive director of the Thai Bond Market Association, adding that the trend would likely continue at least in the first half of 2016.
"Our projection sees (2016) growth of about 15% in new issuers. Property companies are likely to use bond financing again this year."
Last year, new issuers of corporate bonds in the domestic bond market stood at 104 for both short and long-term maturities, up about 27% and exceeding expectations, according to data from the Thai bond association. That was the highest number of new issuers since 2006.
Property developers were among key issuers after the government launched a stimulus package to boost the flagging sector, which included tax cuts and support for low and middle-income earners trying to access mortgage funding. Other sectors seeing growth were utilities and food and beverage.
High bond demand from yield-hungry buyers - comprising domestic institutions and high net worth investors - are precious sources of funds.
Some of the bonds in demand are AAA-rated, while others are lower than BBB or even non-rated, indicating the high level of interest in the face of a tepid stock market.
In 2015, the value of outstanding corporate bonds reached 18% of gross domestic product, up from 16% in 2014. Corporate issuances consisted about a quarter of the 10 trillion baht (US$281.06 billion) in overall outstanding bonds. - Reuters
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