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(Bloomberg) — The Securities and Exchange Commission of Thailand has announced plans to introduce high-yield bonds to boost payment safeguards and investor confidence after several recent defaults and major accounting scandals rocked the speculative bond market. A senior official announced that the government is strengthening its supervision of bonds.
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Secretary General Polnanon Budsaratragon said in an interview that the SEC is currently proactively contacting companies as soon as information or news emerges that the regulator deems could impact their ability to repay high-yield debt. He said there was. He said the agency had not been very active in reaching out to his executives in the past, but that it regularly contacted bond issuers at least three months before their bonds expired.
Demand for high-yield bonds has waned in Thailand following a series of payment delays and corporate scandals, including those related to Stark. This has led to calls from investors for stronger market supervision and monitoring. The Ministry of Finance announced earlier this month that Thailand’s financial authority was prepared to take “appropriate measures” to manage bad bonds.
“We’re trying to avoid any more big surprises,” Polnanon said in his office. “Increased monitoring efforts should provide earlier warning signals to some businesses experiencing payment troubles.”
Thailand’s corporate bond sales may fall for the second consecutive year, partly due to concerns related to rising defaults, the Thai Bond Market Association said. The industry group said investors were becoming more cautious about offering to sell corporate bonds from high-risk companies after a series of payment delays.
Italia-Thailand Development PLC on Wednesday won approval from bondholders to extend the maturities of most of its outstanding bonds by two more years amid a liquidity crunch, but a quorum vote for one tranche was not met. Because of this, the engineering firm had to schedule another meeting. JKN Global Group Pcl, the media company that owns the Miss Universe beauty pageant brand, filed for debt restructuring in court in November, two months after announcing it would be unable to fully repay its bonds.
As part of its increased oversight, Polnanon said the SEC will focus more attention on the bonds of companies with no or low credit ratings by requiring more disclosure of financial data such as cash flows and other ratios. Ta. He said the new requirements will go into effect in the coming months.
Poor sales of high-yield corporate bonds were the main reason for a 19% decline in total domestic bond sales in 2023, according to data compiled by TBMA. Companies without junk ratings or credit ratings sold 92 billion baht ($2.6 billion) of bonds last year, down 29% from a record high of 130 billion baht in 2022, the data showed.
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