US crisis hits loan market in thailand

The economic crisis in the United States has had a nega¬tive impact on Thailand's property developers, who had planned to raise funds from capital and financial markets. Now, bond buyers and commercial banks have tightened their policies and carefully evaluated a business's performance before making an investment decision, Thai Condominium Association chairman Atip Bijanond said.

"Commercial banks have become stricter than before in providing loans to developers. Property com¬panies that had planned to issue bonds to raise funds from the capi¬tal market have had to postpone their plans because foreign and domestic investors have delayed their plans of investment in the property sector," Atip said.

From Bt9 billion worth of deben¬tures that were issued by property companies listed on the Stock Exchange of Thailand in 2003, the companies moved on to raise Bt59.4 billion from the bond market last year and Bt14.8 billion in the first quarter of this year.

AREA's research shows the bonds market serves as a source of funds for property companies that are devel¬oping residential projects, especial¬ly condominiums, which require greater capital than detached hous¬ing or townhouse projects.

Property Perfect chief operating officer Teerachon Manomaiphibul also expects the US subprime prob¬lem to adversely affect Thailand's developers who had plans to issue bonds in the capital market.