Cash crunch fears rise in Thai corporate bond market on pandemic – Nikkei Asian Review




BANGKOK — The novel coronavirus pandemic has created uncertainty in the Thai corporate bond market. Sales of bonds issued by the country’s top companies have been slower than before the outbreak, raising fears of a liquidity crunch.

This has prompted a challenge for Thai corporates whose 600-billion-baht ($19 billion) in bonds are due to mature this year, according to the Thai Bond Market Association. The market uncertainty is bad news, especially for companies that want to keep cash on hand in the face of declining sales caused by the pandemic’s effect on the economy.

In the first half of this year, around 122 billion baht of corporate bonds have been issued so far by major Thai companies, including Siam Cement, True Corp., Berli Jucker, Charoen Pokphand Foods and PTT Global Chemical, the association data shows. That compares with 20.5 billion baht in the same period last year.

However, the bonds did not receive a warm welcome from investors although their coupon rates were well above Thai commercial banks’ savings rate of around 0.3%, which should have encouraged them to switch to bonds.

That is a rare phenomenon in the Thai bond market, which has been experiencing average growth of 14% a year, with the total bond market value rising from 1.3 trillion baht in 2010 to an expected 3.96 trillion baht in 2020, according to the country’s Securities and Exchange Commission.

Seven listed companies including property developer Apex Development, leather product manufacturer Chai Watana Tannery Group and cargo ship operator Precious Shipping
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