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.