The Thai Bond Market Association releases data on “problem bonds” with an outstanding value of 39 billion, “default payments” in 7 series, reaching 22 billion, in 2023 alone, with a value of 16.3 billion. Watch this 17 January. “Bond Holders Meeting” Deciding the fate of ITD “January 29, 2024, the court scheduled a hearing to accept the application for JKN’s business rehabilitation. “ThaiBMA-SEC-Stock Exchange” spreads 3 approaches, strictly issuing bonds.
January 10, 2024 Miss Ariya Tiranaprakit, Deputy Managing Director The Thai Bond Market Association (ThaiBMA) revealed that the outstanding value of distressed bonds at the end of 2023 totaled 39,412 million baht (excluding bonds under rehabilitation worth 73,057 million baht), having u separated into bonds that had failed to repay debt (Default) with a total value of 22,295 million baht, which is a total of 7 companies. Only bonds that defaulted on debt repayment in the past year were 5 companies with a total value of 16,363 million baht, including:
– All Inspire Development Public Company Limited (ALL) (Unrated), 7 models, worth 2,334 million baht.
– Stark Corporation Public Company Limited (STARK) (BBB+), 5 models, worth 9,198 million baht.
– Cho Thavee Public Company Limited (CHO) (Unrated), 4 series, worth 409 million baht (CHO has recently successfully negotiated to extend the bond debt)
– JKN Global Group Public Company Limited (JKN) (Unrated), 7 models, worth 3,212 million baht.
– Destination Resorts Company Limited (DR) (Unrated), 2 models, worth 1,210 million baht.
“In the case of STARK bonds, it is seen as a big surprise to the market. Because it is not a high yield bond. But it is also rated BBB+ which is issued by commercial banks. Therefore, it has quite a strong impact on market sentiment. We admit that we saw many defaults last year on the repayment of bonds. After not being able to see him for 2-3 years.”
Next, in 2024, there is currently 1 default bond company, PP Holiday Company Limited (PPH) (Unrated), 1 series, worth 392 million baht. The reason is due to the long lasting impact of the COVID situation. Perhaps the business has not recovered well enough with the accumulated debt. So there is a liquidity problem.
However, although the outstanding value of the bonds in question will account for only 0.8% of the total outstanding value of bonds of 4.75 trillion baht, but it will affect the investment sentiment of the bond market. Because many companies like STARK received a credit rating of BBB+ and JKN that had profitable financial statements but suddenly had problems.
However, under poor market sentiment, many bond issuers, especially high yield bonds, were unable to sell all of them. There must be a delay in issuing bonds. But it is still seen that not all high yield bonds are considered to have problems because in 2023 we still saw 16 high yield bond issuers who redeemed their bonds before maturity, with a total value of 8,447 million baht.
Keep an eye on the ITD Llys bondholders’ meeting accepting JKN’s rehabilitation petition.
In this regard, the progress of the default bond situation for STARK in June 2023, the bondholder representative called for the immediate payment of all STARK239A, STARK249A bonds due to STARK’s inability to submit financial statements. and the bond holder’s representative insisted that all the debts of the 3 remaining series of bonds were due and payable immediately.
And during July 2023, the SEC office charges the directors. A total of 10 former directors and executives were filed with the Department of Special Investigation (DSI) Subsequently, representatives of bondholders filed a lawsuit against STARK with the Civil Court seeking payment of principal and interest on each series of debts.
The following month, August 2023, 3,500 bondholder creditors filed a class action lawsuit against STARK’s directors and executives in Civil Court, and most recently in November 2023, the Anti-Money Laundering Office (AMLO.) Temporarily freeze STARK assets related to wrongdoing, 16 items, worth 349 million baht.
For JKN during September 2023, after failing to repay JKN239A bonds worth 609 million baht and causing a Default Cross, but bondholders waived the event of default by extending the maturity by one year and increasing the interest from 6.6% to 7%, but During October 2023, representatives of JKN bondholders told them to hold a meeting of the remaining 6 batches of bondholders to resolve the deficiencies.
And the representatives of the bondholders have not yet had time to file a lawsuit with the Civil Court, but in November 2023, JKN used the method of filing an application for business rehabilitation with the Central Bankruptcy Court first. Therefore, it is currently being considered by the court. The hearing will be scheduled to approve the business rehabilitation application on January 29, 2024, causing the litigation process to not move forward. But some bondholders have already gathered names to oppose the business rehabilitation application.
Ms. Ariya further said that for DR during December 2023, the bondholder represents A lawsuit has been filed with the court. and the court received the complaint The date for consideration/examination of witnesses is set for January 18, 2024 for PPH to postpone the payment of some principal and interest due on December 28, 2023 to January 28, 2024. Now that the person Instead, bondholders have already served the notice and must wait to see if they will pay or not. If payment is not made, it is likely that the bondholder’s representative will proceed with legal proceedings.
For Italian-Thai PCL. Development (ITD) has yet to default on its debts. A meeting of all bondholders will be called on January 17, 2024 to approve 2 items on the agenda: 1. Consider facilitating the maintenance of the debt-to-equity ratio (DE), with ITD requirements of 3 :1, which begins to fill. up. In addition, in the past period there was a loan from the bank to increase liquidity and 2. asked to extend the debt for another 2 years and increase the interest rate.
Therefore, if the mentioned bonds are included there will be a debt default value of 28,467 million baht (in this case, ITD is included).
Spread 3 approaches to tighten the issuance of bonds
Regarding the operational guidelines that the society will see results in 2024, there are 3 main issues: 1. Increasing the disclosure of financial information of the Issuer (bond issuer), which will draw attention to the ability to repay debts. Whether it is a working capital ratio (Current Ratio), debt service ability ratio Debt to interest expense ratio There will be about 8 ratios of the SEC office disclosure forces And these ratios are usually compared to the industry as that investors can make informed investment decisions.
“I have spoken to the Stock Exchange that the datasets for bonds and stocks should be the same. marking It should also appear as news on the stock exchange.”
2. Create a High Yield bond covenant (financial requirements that bond issuers must comply with) that covers important conditions to protect investors’ interests, such as setting the debt-to-equity ratio. But in the past, all companies have set DE, but it may not be a sufficient ratio to protect the interests of investors. For example, JKN has set DE 3:1 on the default date for debt payment is only 1.5:1 , so it The facts of the business are right.
At the same time, guidelines for supervision in foreign countries In the case of the issuer of high yield bonds Additional care will be taken when considering the financial information of the subsidiary/parent company as well.
and 3. Create a standard contract for bondholder representatives to increase the duties of the bond issuer/registrar. towards the representatives of bondholders in fulfilling their duty to effectively protect the interests of investors A hearing will be held at the beginning of this year.
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