SEC mulls alternative bond funding

SEC mulls alternative bond funding

Agency seeks tax perks for fund

Deputy Prime Minister Somkid Jatusripitak
Deputy Prime Minister Somkid Jatusripitak

The Securities and Exchange Commission (SEC) has floated an idea to set up a fund to help issuers of non-investment-grade corporate bonds in the pandemic era.

The securities watchdog requested the Finance Ministry offer tax privileges to make the fund's establishment viable, and funding must be sought from several sources, said Deputy Prime Minister Somkid Jatusripitak.

"We're plugging every loophole to heal individual and business operators that have yet to get assistance," he said.

The central bank's Corporate Bond Stabilisation Fund (BSF) is restricted to providing financial assistance to investment-grade corporate bonds rated by Tris Rating and Fitch Ratings.

Credit ratings cannot be used as aid criteria because it could hamper some potential businesses that have ratings below investment-grade from accessing the assistance scheme, said Mr Somkid.

The objective of the measure is to keep bond issuers with business potential afloat during the pandemic, despite their non-investment-grade ratings, he said.

The BSF is a 400-billion-baht bridge financing facility to help investment-grade corporate bond issuers that are unable to fully roll over bonds maturing during 2020-21.

The fund is limited to investment of up to 3% of the entire facility in each corporate bond issuer, and not exceeding 10% for each sector to diversify risks.

The BSF is under the government's third phase of relief measures.

Ariya Tiranaprakij, senior executive vice-president of the Thai Bond Market Association, recently said nine companies, most of them listed, have reported extension of interest payment on issued debentures this year.

MAI-listed Asia Capital Group Plc (ACAP) reported in April it was unable to pay interest on two series of issued debentures for debenture holders as it has not received repayment from its loans as anticipated.

Embattled national carrier Thai Airways International Plc was excluded from debenture payment default because the company has entered into a business rehabilitation process under the Central Bankruptcy Court.

Mr Somkid also asked the Finance Ministry to seek ways to alleviate the financial burden of businesses that have users reluctant to use their services, even as some have been allowed to resume business.

The ministry, for example, may offer incentives to encourage landlords to reduce rent to tenants, he said.

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