The number of Thai corporate borrowers issuing new bonds may surge 15 percent this year to topple a near decade high last year, 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 this year. “Our projection sees [2016] growth of about 15 percent 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 percent 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.
Last year, the value of outstanding corporate bonds reached 18 percent of GDP, up from 16 percent in 2014. Corporate issuances consisted about a quarter of the 10 trillion baht (US$281.06 billion) in overall outstanding bonds.
Thailand’s central bank is keeping its powder dry on interest rates and is ready to act in the event of external shocks including a sustained decline in oil prices and even slower growth in China, Governor Veerathai Santiprabhob said on Monday.
The Bank of Thailand has “limited scope” to reduce rates because borrowing costs are already near a record low, but has “reserved some space” to act if needed, he said. Veerathai and the other six members of the bank’s Monetary Policy Committee voted unanimously on Feb. 3 to hold the rate at 1.5 percent for a sixth straight meeting.
Additional reporting by Bloomberg
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by