SEC-ThaiBMA project pushes fund-raising through bond issues

Economy March 11, 2015 01:00

By The Nation

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The Securities and Exchange Commission and the Thai Bond Market Association have launched the "One Step Beyond with Bond Issue" project to encourage businesses that have never raised funds through the debt market.



The ThaiBMA is offering a discount on its registration fee to bond issuers this year.

Vorapol Socatiyanurak, secretary-general of the SEC, said yesterday that bond issuance had become a more popular fund-raising channel as manifested by the steady rise in the corporate bond market’s value.

A survey of asset-management companies found that mutual funds for accredited investors invested in a greater variety of debt securities and more complex debt securities.

The SEC promotes diversifying fund-raising channels for businesses. Bond issuance could give businesses a better capital structure and also benefit the economy in terms sourcing and allocation of funds.

However, most companies, whether listed on the Stock Exchange of Thailand or unlisted, have never issued bonds, even though bonds are subject to fewer requirements than equity.

The SEC has eased regulations to simplify the process and revised mutual funds investment rules to facilitate investment in corporate bonds, Vorapol said.

Tada Phutthitada, president of the ThaiBMA, said the corporate bond market had continued to grow.

Last year, it vaulted 32 per cent to Bt553.94 billion.

Some of the long-term bonds were sold by 24 first-time issuers, while 56 companies were newcomers for Bt1.18 trillion in short-term issues.

However, the issuers are concentrated in a few industries, while small and medium-sized companies rarely use bonds to mobilise capital.

Actually, the current circumstances tend to support corporate bond issuance. For example, the low interest rate, more stringent practices of financial institutions in loan approval and the decrease in issue size with the increase in issuers, Tada said.