Loan syndication up for investment abroad

Both joined a US$200-million (Bt6.64 billion) three-year loan syndication to Thoresen Thai Agencies (TTA). While KBank is lending half, KTB has offered $50 million, and the rest is made up by the Export-Import Bank of Thailand and Mizuho Corporate Bank.

Thiti Tantikulanan, head of capital markets at KBank, said the bank now commanded 30-40 per cent of the $2-billion syndicated-loan market.

"We're holding discussions with many companies with foreign-investment plans, because investment in Thailand is saturated. They're looking for business-expansion opportunities abroad, and some of them want to expand business in their own supply chains," he said.

KTB is dealing with four or five projects that are expanding investment in the energy sector abroad, and each one needs Bt10 million to Bt20 million worth of syndicated loans, said Sompis Charoenkiatikul, senior executive vice president and managing director of the bank's Corporate Banking Group.

Sompis said this fit in with the bank's plan to boost net corporate loan growth by Bt10 billion, from Bt300 billion at present, which accounts for 30 per cent of the total loan market.

Next year, corporate loans are expected to rise by Bt20 billion, she said.

With the syndication, which slightly raises the debt-to-equity (D/E) ratio to 0.2, TTA is expanding investment in shipping, energy and infrastructure.

ML Chandchutha Chandratat, group managing director and chief executive of TTA, said his company had finished three merger and acquisition (M&A) deals this year, including with Unique Mining Services (UMS).

He said TTA had "four or five" other deals in Asia that might not be finished this year.

Chandchutha said after buying companies in Vietnam and the Philippines, the company still had sufficient cash to buy Bt5 billion to Bt7 billion worth of assets.

"This loan is very flexible, because the company wants to have flexibility to finance the M&As," he said.

Some the loan will go for the UMS deal.

At present, the shipping business contributes the biggest portion of company revenue and net profit, at 65-70 per cent, while energy operations contribute 25 per cent, and the rest is from the infrastructure business.

The company expects to diversify revenue and net profit to these three businesses equally by 2013.

Chandchutha said with a low D/E ratio, TTA has the ability to build up loans, but the ratio would not exceed 1.5.

"Next year, the shipping business won't be better than this year, due to lagging demand compared with supply, but the energy business will show improvement, as oil prices are expected to trade in the range of $75 to $80 a barrel. Many projects will surface, and the company will be able to make better use of assets," said Chandchutha.

He expects this year's revenue and net profit to fall below last year's level before increasing next year.

KBank's Thiti said aside from syndicated loans, many companies were also raising funds through corporate bonds for foreign investment and to refinance their debts.

He also said the baht should trade in the range of 32.90-33 to the US dollar, because the dollar was expected to depreciate further, following US Federal Reserve Chairman Ben Bernanke's announcement that interest rates would be kept low on uncertainty about the recovery. This will buoy carry trade in dollars and encourage investors to flock to other assets.

"The baht has strengthened 4-5 per cent against the dollar this year, and the Bank of Thailand has tried to manage the currency continuously, as seen from the exchange-reserve figures. The increase in reserves, previously $1.4 billion to $1.5 billion a week, has declined to $200 million to $300 million a week in the past few weeks," Thiti said.