Random Thoughts: Bonds
What? TC looking @ bonds?
Yes, for $hits and giggles…given that there’s been a lot of noise about companies being unable to rollover/payback their bonds, well it’s probably prudent to be paying attention to this section of Thailand’s capital markets.
And as I like to laugh that MQDC is the next STARK/JKN to be unable to pay back it’s bonds…well let’s have a quick look….
First things first, here are the data sources:
- The Thai Bond Market Association https://www.thaibma.or.th/EN/homeEN.aspx
- Registered Bonds: https://www.thaibma.or.th/EN/BondInfo/RegisteredBond/RegisterSummary.aspx
- And then you go to the Corporate bonds & Commercial paper and you’ll be able to download all the notional value of the bonds.
- I’ve gone ahead and put it on excel here
So what?
So that’s a total of THB 1.1 trn due from now until the end of next year. When you go through the list of companies, well there isn’t too much to fear imo. Just a slightly higher cost of interest by +1% from where they are today. Impact upon most of the companies should be minimal…but here are two that caught my eye…
That’s Ananda Development, that’s THB 7 bn to roll over next year, I have no idea who is going to want to finance them….unless it’s @ 10-15% p.a. w/ collateral. And here is the share price over the past 5 years, and it’s market cap is only THB 3.2 bn at the moment.
And next is..
MQDC
That’s THB 21 bn (THB 54bn by 2026) to rollover next year, and they’re already paying 7.1%. Now they aren’t listed but…
Source: https://datawarehouse.dbd.go.th/index, Company Name: Magnolia Quality Development Corporation
Apparently MQDC has THB 60 bn in assets…and only THB 51 bn in liabilities as of FY22 (note something is already off in the financials…according to the thaibma there’s thb 54bn of interest-bearing debt but the financials from here say its thb 51bn….). But let’s say they are paying 7% still on all that debt, THB 3.78bn in annual interest payments…
…I have no idea where they are going to come up with the cash flow to even pay down the nominal debt let alone the interest payments going forward. Asset sales? Recap? What construction company would dare to work with this entity? So fun times ahead….
simon
greats stuff. thanks for the excel. yes next year will be exciting to unwrap the collaterals. until then, merry xmas
Pon
Oui papa
don
One Income Fund I have been buying up is DIF, which has a floating rate debt. The unit price has been hammered, due to the high interest rate environment. I expect this (and the debt servicing costs) to decline slowly, over the next 5 years. I appreciate that it is in essence a leasehold play 30% of income-earning leases (towers) expire in 2033; the remaining leases (fibre signal) expires in 2043. I just read that TRUE has been looking at removing the less efficient towers. My understanding of the terms of the tower lease relationship between DIF, DTAC and TRUE is that the terms of the varrious leases cannot be termonated, without the approval of the DIF unit holders. I would really really really appreciate if you have any info/could comment on this. TIA.
Pon
Have been told that they will rationalise the towers for DTAC and TRUE. I don’t know the exact legal mechanism for this. Perhaps a sale to NT.
don
thank you Pon. first best regards for an enjoyable and hopefully restful year end holiday. I have had a Maybank KE researcher contact both TRUE & DIF, yesterday It appears that yes, TRUE will rationalize the portfolio of towers to eliminate the least efficient ones. But it will be non-DIF towers. I suspect that the market is so jittery that it has misread what this this story is – it has no effect on DIF’s revenue earning prospects. Live long and prosper 👌