Asia Capital defaults on B689m debt
Listed firm plans to dump properties
MAI-listed Asia Capital Group Plc (ACAP) has defaulted on the repayment of debentures worth 689.40 million baht, subsequently resulting in a cross-default involving other debts totalling 1.89 billion baht.
The amount of debenture default represents 18% of the company's total assets as of March 31, while the cross-default value is equal to 49% of total assets.
ACAP plans to expedite selling its properties and find a source of funds to repay bond holders.
On the basis of the company's financial status, ACAP's assets are greater than its liabilities and remain sufficient to cover debt.
ACAP's debenture default and cross-default have surfaced against the backdrop of the coronavirus crisis, which also saw flag carrier Thai Airways International Plc default on debentures after the Central Bankruptcy Court's acceptance of THAI's rehabilitation petition.
Ten companies have secured extended payments of principal and interest or restructured their issued debentures during the pandemic, according to information collected from the Securities and Exchange Commission, the Stock Exchange of Thailand and the Thai Bond Market Association.
The outstanding value of these payment-extension debentures is worth a combined 7.2 billion baht, which excludes the default amount of ACAP and THAI debentures.
Most of these debentures are classified as high-yield bonds. The issuers operate in businesses ranging from property and tourism to transport and finance.
High-yield bonds are defined as non-rated bonds or those with lower credit ratings than investment-grade bonds.
High-yield bonds are not supported by the Bank of Thailand's 400-billion-baht Corporate Bond Stabilisation Fund, which was set up to provide financing for high-quality firms with bonds maturing during 2020-21.
Despite growing concerns over debenture defaults as businesses are disrupted by the pandemic, the situation is not expected to culminate in a crisis, said a financial industry source speaking on condition of anonymity.
Many debenture issuers have prepared liquidity through bank loans, the source said, while liquidity in the money market remains abundant because of the low-interest-rate environment.
But next year's situation will depend on the persistence of the crisis, vaccine development, the global economic situation and interest rates worldwide, the source said.