Finance ministry’s vigilant watch over corporate debenture repayments

Corporate debenture repayments are under the watchful eyes of the Finance Ministry, according to a statement by Lavaron Sangsnit, its permanent secretary. The ministry, along with the Bank of Thailand (BoT) and the Securities and Exchange Commission (SEC), are vigilantly monitoring potential defaults on maturing debentures.

In a recent evaluation, it emerged that only a single company was struggling to secure funds to repay debentures. Lavaron reassured that the ministry and associated agencies are prepared to promptly intervene should a default occur.

In Lavaron’s view, the capital market is in a position to uphold financial stability. However, a previous announcement by the central bank noted that more corporate issuers are getting negative outlooks or rating actions than in the past, due to enterprise-specific internal factors.

The bank added that investors might exhibit greater caution when it comes to high-yield bond investment, particularly non-rated bonds.

Prime Minister Srettha Thavisin is due to hold a meeting with the Finance Ministry and central bank today to discuss debenture repayment delays and default management measures.

Market stability was tested earlier this week when Italian Thai Development Plc (ITD), a leading contractor in the country, announced its intention to delay principal repayments on 14.3 billion baht worth of debentures by two years. The news led to a 12% drop in ITD shares.

Lavaron sought to mitigate concerns, stating that a bondholders’ meeting is anticipated soon to negotiate a deferment or extension of the repayment period instead of declaring it as a default.

He added that this approach would result in investors earning a higher amount of interest while giving bond issuers more time to accumulate funds for repaying debentures.

In 2021, JKN Global Group, a SET-listed company and owner of the Miss Universe Organization, deferred repayment on its bonds and subsequently filed for business rehabilitation with the Central Bankruptcy Court in October.

In a related development, the central bank is predicted to submit a final list of eligible virtual bank licence holders to the Finance Ministry for approval this week after the first draft was delivered in July last year.

In the initial phase of its digital plan, the BoT is providing up to three virtual banking licences, extending eligibility to both financial institutions and non-financial firms.

The central bank has indicated it will consider more licence applications in the future if additional parties satisfy the virtual bank requirements, reported Bangkok Post.