Massive Thai loan auction disappoints
Massive Thai loan auction disappoints
BANGKOK (AFP): Thai finance officials on Saturday faced accusations that a massive US$6.2 billion auction of business loans was a failure after it drew bids worth less than a fifth of total asset values.
Loans were culled from 56 finance firms that folded after Thailand plunged into economic crisis following Asia's currency meltdown in mid-1997.
The Financial Sector Restructuring Authority (FRA) which administered Friday's sale said 13 bids were tabled, of which eight had been successful.
Forty-four of the 46 bundles of a total of 7,000 loans on offer were sold -- 98 percent of total assets up for grabs, the FRA said.
Assets with an aggregate outstanding principal balance of 221 billion baht ($5.9 billion) were sold, but only fetched 40.3 billion baht ($1.1 billion), equivalent to only 18.2 percent of their outstanding value.
Successful bidders included Goldman Sachs (Asia) Finance, Global Thai Finance and Securities Limited, which is run by Lehman Brothers and Starwood Thailand Holdings.
Thailand's Asset Management Corporation, a government agency set up as a bidder of last resort walked away with 29 lots worth about 31 billion baht.
Proceeds from the sale will be used to pay creditors of the folded finance firms.
FRA Chairman Amaret Sila-On told reporters late Friday he could not say if the sale had been a failure.
Amaret tearfully admitted last December that a first auction of some $10 billion worth of business loans had failed after it realized only around 19 percent of asset values.
Sections of the Thai press poured scorn on the auction results Saturday.
Branding the sale as a "flop" the Nation daily said "Failure came again to the Financial Sector Restructuring Agency."
But some analysts were more charitable, pointing out that many assets up for sale are classified as non-performing so it was not a surprise bids were unimpressive.
Others said that despite the low bids, the near completion of the auction process marked another step on Thailand's road to recovery.
"I don't think you should attach too much importance to it," said one specialist in Thai finance.
"It had to be done, they had to find some sort of mechanism to deal with the insolvent finance companies.
Officials had hoped the loans would fetch around 25 percent of total asset value after hopes of recovery were boosted by the recent passage through parliament of bankruptcy and foreclosure laws deemed vital to rescuing the battered Thai economy.
The process of recouping the debts of the closed firms is viewed as a key test of Thailand's efforts to piece its shattered economy back together.
December's auction, worth $10 billion, was branded a failure by officials when only nine of the 45 lots on offer were shifted in what was billed as the "biggest ever one-day asset sale."
Although agreements were later reached to sell more batches of loans the results set back hopes Thailand was about to emerge from its economic turmoil.
The sell-off has also been heavily criticized in Thailand by opponents of the government who see it as a "firesale" that will result in a bonanza for foreigners.
Officials said last month they were ready to start carving up the proceeds of huge sales of finance firms' assets.
Assets and loans culled from the firms have been sold off in a series of auctions, but officials have refused to say how much money has been raised.
Sold holdings include auto hire purchase contracts and residential mortgage loans.
Symbols of Thailand's economic boom years of the late 1980s and 1990s, some 160 golf course memberships and 2,000 mobile telephones and pagers from the firms went on sale last August.
Other assets disposed of included furniture and art that once graced the companies' boardrooms and lobbies.