New corporate bond issuance in Thailand has hit a record of 1 trillion baht, thanks to strong demand for fund mobilisation for mergers and acquisitions and business expansion locally and abroad, says the Thai Bond Market Association (TBMA).
Thai companies had allocated bonds worth a total of 1 trillion baht as of Nov 18, outpacing the TBMA's full-year forecast of 750-800 billion baht, and a further 300 billion remains in the pipeline and is expected to be issued later this year, said TBMA president Tada Phuttitada.
Thai conglomerates and big companies mobilised funds through the bond market this year to fund their acquisition and business expansion plans, as well as refinance maturing debt, Mr Tada said.
Allocation of perpetual bonds worth 100 billion baht, representing one-tenth of bonds sold this year, also gave a boost, he said.
International businesses and the domestic market, including the rollover for debt repayment, account for some 100 billion baht or about 10% of total corporate bonds this year.
"The corporate bond market's promise will continue amid the low-interest-rate environment as issuers can rollover bonds to take advantage of lower costs," he said.
Mr Tada predicts the volume of new corporate bonds to decline to 800 billion baht, as several companies already issued bonds this year.
Sirinart Amornthum, senior vice-president of the TBMA, said six out of 180 corporate bond issuers raised capital worth 266 billion baht this year.
The six issuers were True Corporation Plc at 72 billion baht, Thai Beverage Plc at 53 billion baht, Berli Jucker Plc at 38 billion baht, True Move H Universal at 37.3 billion baht and Bank of Ayudhya and Minor International Plc at 33 billion baht each.
According to TBMA data, the amount of new corporate bond issuance has kept rising over the past five years.
Thai companies offered bonds worth 589 billion baht in 2014, 595 billion baht in 2015, 811 billion baht in 2016, 826 billion baht in 2017, 879 billion baht in 2018 and 1 trillion baht as of Nov 18 this year.
The outstanding corporate bond amount jumped from 2.47 trillion baht in 2014 to 3.92 trillion as of Nov 18, 2019.
Ms Sirinart said corporate bonds that are due to mature in 2020 and 2021 amount to 677 billion and 695 billion baht, respectively, representing 60-70% of new bonds each year.
In 2020, most maturing corporate bonds were issued by the financial sector, accounting for 19% of the total bonds due to be redeemed, followed by the property sector at 17%.
Corporate bonds issued by property developers worth 115 billion baht are expected to be rolled over next year, and 18 billion baht worth of them were allotted by 25 companies with credit ratings below investment grade at BBB-.
"If the economy continues to slow down, it will deal a blow to some companies' earnings and their credit ratings could be cut or even defaulted," Ms Sirinart said. "Therefore investors have to monitor the market situation in the future."