Exim bank: Earth loan not overdue
State-owned Export-Import Bank of Thailand (Exim Thailand) says its loan to cash-strapped Energy Earth Plc is not overdue and the bank's capital buffer is high enough to set aside loan-loss reserves if necessary.
Energy Earth has yet to draw down the entire US$10 million (340 million baht) credit line offered by Exim, the bank's president Pisit Serewiwattana said without identifying the precise amount used.
If Exim Thailand has to set aside loan-loss reserves to lend to Energy Earth, the bank's financial position will be unharmed because of its high capital adequacy ratio (CAR) of 18% of risk-weighted assets, Mr Pisit said.
Energy Earth on Wednesday informed the Stock Exchange of Thailand that the company had already defaulted on 6.55 billion baht -- 5.5 billion baht of bonds, 887 million of trust receipts and packing credit, and 160 million baht of bills of exchange (B/Es).
The company said it expects to default on an additional 406 million baht worth of debt this month.
Mr Pisit said Exim Thailand is waiting for Energy Earth to submit its business outlook and debt repayment plan in one to two days.
In another development, Exim Thailand rolled out a low interest rate product for small and medium-sized enterprises (SMEs) to entice them to capture opportunities from improving exports in the second half.
The bank caps revolving credit at 2 million baht each, and charges borrowers 5% for the first year, a prime rate of minus 1 percentage point for the second year, and the rate depending on the bank from the third year.
If borrowers do not have collateral to back the revolving credit facility, they can ask for a credit guarantee at the Thai Credit Guarantee Corporation (TCG), which collects a fee of 1.75% of the loan amount.
Those who are eligible to obtain revolving credit must not have recorded a net loss for three years in a row and not have bad debt repayment records.
SMEs, accounting for 27% of the country's export value, saw their exports plunge by 13.5% for the three months to March, while Thailand's exports expanded by 3.1%. Moreover, less than 1% of 2.7 million SMEs operators export their products.
Mr Pisit sounded a bullish note on global trade prospects this year, based on the International Monetary Fund's forecast that global trade growth of 3.8% will be higher than world economic growth of 3.5% this year.
With the brighter economic outlook globally, he predicted Thailand's export growth to surpass 3% this year, the strongest pace in six years.
Meanwhile, Rapee Sucharitakul, secretary-general of the Securities and Exchange Commission, gave assurances that a spate of B/E defaults would not trigger a domino effect, as defaulters are spread across several sectors.
In Energy Earth's case, the SEC is awaiting the company's debt repayment plan, Mr Rapee said.