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Credit Crunch? Not for Some Asian Companies

Instead of traditional bank borrowing, companies tapping retail, institutional investors by issuing bonds. In Thailand, companies have so far raised $2 billion through bonds this year. New corporate bond issuances rose nearly seven-fold from January to mid-March.

These companies have been raising funds at home, taking advantage of Asia’s excess savings and an appetite for higher yield, less risky investments.

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Instead of traditional bank borrowing, companies tapping retail, institutional investors by issuing bonds. In Thailand, companies have so far raised $2 billion through bonds this year. New corporate bond issuances rose nearly seven-fold from January to mid-March.

These companies have been raising funds at home, taking advantage of Asia’s excess savings and an appetite for higher yield, less risky investments.

Nattapol Chavalitcheevin, president of the Thai Bond Market Association, says bank deposit interest rates have fallen close to zero, forcing many savers and investors to look for alternatives.

“The saving rate dropped from 0.75 percent to 0.5 percent only,” said Nattapol. “So that’s why investors are looking for new investment which can earn higher return. So that’s why corporate bonds can be issued in the domestic market. Mutual fund companies also set up new funds to invest in corporate bonds because government bond yield is quite low. For example, the yield of a five-year government bond 2.4 percent.”

In Thailand, companies have so far raised $2 billion through bonds this year.

In Thailand, companies have so far raised $2 billion through bonds this year.

Investors in the Thai state-owned energy company PTT’s 15 billion baht or $423 million bond last month could earn five percent interest in the first five years. Analysts say these blue chip companies find it easier to issue bonds because they have established market shares, reliable revenues and high credit rating. Factory developer Ticon Industrial Connection TICO.BK plans to issue bonds worth up to 3.0 billion baht with maturities of up to 10 years. Thailand’s Kasikornbank KBAN.BK raised a planned bond issue to up to 170 billion baht ($4.74 billion) from $3 billion previously. Thai housing developer Asian Property AP.BK plans to sell bonds, or bills of exchange, worth up to 4.0 billion baht with maturities of up to 10 years. Thailand’s biggest cinema chain operator, Major Cineplex MAJO.BK, plans to sell bonds worth up to 1.5 billion baht with maturities of up to 5 years to fund expansion plans.
Power Line Engineering PLE.BK plans to sell up to 800 million baht of up to 5-year bonds to fund business expansion. Property developer Sansiri PCL SIRI.BK plans to sell up to 3 billion baht of up to 10-year bonds in domestic or foreign markets.
PTT Chemical PCL PTTC.BK (PTTCH), Thailand’s largest olefins maker, said it planned to seek funds worth up to 30 billion baht ($848 million) in the five years to 2013. Thailand’s top mobile phone operator, Advanced Info Service PCL (AIS) ADVA.BK, said it planned to issue bonds worth up to 15 billion baht ($425 million) in baht or other
currencies. Siam City Cement SCCC.BK said it planned to sell bonds
worth up to 10 billion baht with maturities of up to 10 years.

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Credit Crunch? Not for Some Asian Companies

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