The Securities and Exchange Commission is stepping up supervision of high-yield bonds to boost payment safeguards and investor confidence after several recent defaults and a major accounting scandal rocked the market for speculative debt, SEC Secretary-General Pornanong Budsaratragoon said.
The SEC is now pro-actively contacting companies as soon as information or news emerges that the regulator views as potentially affecting the ability to service high-yield debt, the secretary-general said in an interview. Previously, the agency was less active in contacting executives, though it regularly reached out to bond issuers at least three months before their notes expired, she said.
Demand for high-yield debt in Thailand has waned after series of payment delays and corporate scandals, including one related to Stark. These sparked calls by investors for more market supervision and monitoring. Thai financial authorities are prepared to implement “appropriate measures” to manage distressed fixed-income debt, the Finance Ministry said earlier this month.
“We are trying to prevent any more big surprises that could catch us off guard,” Ms Pornanong said at her office. “Tightening our monitoring efforts should provide more early warning signals on some companies with payment trouble.”
Thailand’s corporate bond sales may drop for a second-straight year partly because of concerns related to rising defaults, according to the Thai Bond Market Association. Investors have become more cautious about subscribing to bonds sales of high-risk companies after a series of missed payments, the trade group said.
Italian-Thai Development on Wednesday won bondholders’ approval to extend the maturity dates for most of its outstanding bonds by another two years amid a liquidity crunch, but the engineering firm had to schedule another meeting because the vote on one tranche lacked a quorum. JKN Global Group, a media company that owns the Miss Universe beauty-pageant brand, in November petitioned a court for debt restructuring, two months after announcing its inability to fully honour its bond repayments.
Ms Pornanong said the SEC, as part of its monitoring boost, will put additional attention on bonds of companies with no credit rating or low grades by requiring more disclosure on financial data, such as cash flow and other ratios. The new requirements are expected to be implemented in the next few months, she said.
The slump in high-yield corporate bond sales was a key reason for the 19% decline in total domestic debt sales in 2023, according to data compiled by the TBMA. Companies with junk ratings or no credit assessments sold 92 billion baht of bonds last year, a 29% drop from a record 130 billion baht in 2022, the data show.