Thai firms rush to issue ECDs
Thai firms rush to issue ECDs
BANGKOK (Reuter): Thai listed companies are taking advantage of the local stock market's recovery and a downtrend in interest rates abroad to step up the issue of Euro Convertible Debentures (ECDs), bankers and analysts said yesterday.
Since the beginning of the year five Thai firms have announced they will issue ECDs in foreign markets, compared with four issues in all of 1995 and nine in 1994, data from the Securities and Exchange Commission shows.
An ECD is a type of bond issued in foreign markets in foreign currencies that can be converted into the issuing company's shares at a fixed price at a set time.
The total value of ECDs issued last year was 7.9 billion baht (US$316 million) compared with 22.42 billion baht ($897 million) in 1994.
The five firms that have already announced issues this year say they will issue ECDs worth a total of up to US$450 million.
"It is very difficult to issue ECDs in a bearish stock market as most of investors view ECDs as equity rather than debt instruments," said Thanathip Vidhayasirinun, senior vice president at Cathay Trust Finance and Securities.
"The rising stock market and declining interest rates make fund raising through ECDs attractive," he told Reuters. "There are many other companies planning to raise funds through the ECD instrument."
The latest Thai firm to make an ECD issue is Central Pattana Plc, a property wing of the Central Department Store Group. On Tuesday, it announced a US$60-$80 million issue to raise funds to finance business expansion.
"Companies have opted to issue ECDs instead of other debt instruments now because it timely to do so now compared with previous year," said Pratana Manomaiphiboon, executive director of finance and accounting at Central Pattana.
"The company believes the recovering stock market and falling interest rates overseas will make the coupon rate on the issue low," she added.
Other ECD issues announced so far in 1996 are: Univest Land Plc -- $80 million; Property Perfect Plc -- $50 million; Finance One Plc -- $100-$120 million; and Banpu Plc -- $90-$120 million.
In 1993, which was considered a golden year for Thai ECD business, 17 Thai companies raised funds worth 39.29 billion baht (S1.57 billion) through ECDs in the overseas markets.
Thanathip said Thai ECD business was unlikely to this year reach the heights seen in 1993, which was an exception, but the number of firms announcing issues could still grow.
"If the newly announced ECDs, including Finance One, receive a warm welcome from foreign investors, we may see more issues of ECDs this year," Thanathip said.
Finance One, Thailand's largest finance company, plans to launch ECD issue roadshows in Switzerland and London this week.