Would you invest in these bonds?

[Brunolem]

A Thai company, famous for providing mobile phone and internet access, as well as satellite TV, will soon be offering bonds, maturing between 2 and 5 years from now, with rates ranging from 3.7 to 5%.

 

These bonds can be purchased at local commercial banks, only next week. 

 

Obviously these rates are far better than those offered on saving accounts, even after a 15% tax deduction. 

 

As a long term resident, not concerned with the Thai baht exchange rate, would you consider buying such bonds, and if not why? 

[fletchsmile]

I wouldn't invest without the name of the company, based on what someone wrote on the internet ????

 

That said, I have invested in corporate bonds of Thai companies in the Thai market, e.g. as CPAll. Rates were better than cash after the 0.15% WHT, for 3 years, and I felt that wasn't too long term with Thai rates going nowhere or downwards.

 

I didn't like the rates on the 5 year and 7 year tranches. But horses for courses. Nor would I like to put all my eggs in their single basket. But for mid-term, better than cash rates, I was happy to stick some money in.

 

3.7% then WHT deducted is too low for me these days though, and not worth me locking funds away in. 5% for 5 years is tying up a bit too long in cash for my likes

 

Cheers

Fletch ???? 

[uhuh]

Sounds good

[AlexRich]

It depends on how strong the company is ... strong cash flow, low gearing (debt), solid balance sheet, good management ... and it might be fine. Weak cash flow, high gearing, shaky balance sheet, and poor management ... and I'd give it a miss.

 

You want to make sure that they can pay the coupon (interest) and repay the principal (your investment) at the end of the term.

[gk10002000]

I have owned many bonds in my US portfolios.  In my regular brokerage account I only hold tax free municipal bonds.  Does Thailand have equivalent tax free bonds?  How is taxable bond interest handled in Thailand for an expat?

[Naam]

7 hours ago, AlexRich said:

It depends on how strong the company is ... strong cash flow, low gearing (debt), solid balance sheet, good management ... and it might be fine. Weak cash flow, high gearing, shaky balance sheet, and poor management ... and I'd give it a miss.

 

You want to make sure that they can pay the coupon (interest) and repay the principal (your investment) at the end of the term.

how does one make sure that...?

[edixon15]

I wouldn't do it with out doing a thought review of the companies fundamental situation. Bonds can quickly go into junk status if they miss a few payments or fall short on their promise to pay. 

[Naam]

On 5/17/2019 at 11:59 AM, Brunolem said:

1. A Thai company, famous for providing mobile phone and internet access, as well as satellite TV, will soon be offering bonds, maturing between 2 and 5 years from now, with rates ranging from 3.7 to 5%.

 

2. These bonds can be purchased at local commercial banks, only next week. 

 

3. Obviously these rates are far better than those offered on saving accounts, even after a 15% tax deduction. 

 

4. As a long term resident, not concerned with the Thai baht exchange rate, would you consider buying such bonds, and if not why? 

1. what's the rating of this company?

 

2. there's no such thing like "can only be bought next week". bonds are tradeable till the last day of their maturities.

 

3. that might be the case but withholding tax is deducted on "savings cash" too.

 

4. i wouldn't buy because a 5% yield for a THB 5-year maturity seems to indicate a low credit rating when compared to a sound BBB+ rated company such as PTTP's

 

https://en.wikipedia.org/wiki/PTT_Exploration_and_Production

 

who's longbond -denominated in USD and maturing in 2042- yields a meager tax free 4.555 %...

 

all aforesaid in my [not so] humble opinion as a long time bond trader and investor.

[AlexRich]

11 hours ago, Naam said:

how does one make sure that...?

Firstly, I’ve no idea who the company is. The point was a general one, only consider corporate bonds with financially strong companies. 

[Naam]

2 minutes ago, AlexRich said:

Firstly, I’ve no idea who the company is. The point was a general one, only consider corporate bonds with financially strong companies. 

point taken.

[GarryP]

True Corporation.

[gk10002000]

I don't know much and would not trust much about Thailand company infrastructures, financial soundness, etc.  In the USA the reporting requirements are somewhat reliable and monitored (although obviously things like Madoff can raise concerns).  When I buy bonds or stocks in the USA I can view things such as Morningstar, and other financial review sources of companies.  Does Thailand have anything similar that anybody has any experience with?

[Naam]

7 hours ago, gk10002000 said:

I don't know much and would not trust much about Thailand company infrastructures, financial soundness, etc.  In the USA the reporting requirements are somewhat reliable and monitored (although obviously things like Madoff can raise concerns).  When I buy bonds or stocks in the USA I can view things such as Morningstar, and other financial review sources of companies.  Does Thailand have anything similar that anybody has any experience with?

yes Thailand has its own rating agency called "TRIS" wich rates True Corp. BBB+ whereas the last rating of Moody's is a meager single B.

 

paint your own picture!

[Lacessit]

I would need a look at the balance sheet of the company. It depends on how highly the company is geared, and whether it can service the debt.

[Brunolem]

14 hours ago, Naam said:

1. what's the rating of this company?

 

2. there's no such thing like "can only be bought next week". bonds are tradeable till the last day of their maturities.

 

3. that might be the case but withholding tax is deducted on "savings cash" too.

 

4. i wouldn't buy because a 5% yield for a THB 5-year maturity seems to indicate a low credit rating when compared to a sound BBB+ rated company such as PTTP's

 

https://en.wikipedia.org/wiki/PTT_Exploration_and_Production

 

who's longbond -denominated in USD and maturing in 2042- yields a meager tax free 4.555 %...

 

all aforesaid in my [not so] humble opinion as a long time bond trader and investor.

The rating is actually BBB+. 

 

The limit to buy before the 23rd is for those who want to buy at the date of emission. 

 

Of course, it will be possible to buy or sell at a later date, but the conditions will be different, depending on how these bonds fare on the market. 

 

I have never paid any tax on a saving account... 

 

[Naam]

2 hours ago, Brunolem said:

The rating is actually BBB+

this rating is from the Thai agency "TRIS" which is for international standards irrelevant as are the domestic rating agencies of other countries.

 

Moody's last rating is B2 which corresponds to S&P's and Fitch's single B.

 

Quote

Moody's Investors Service has withdrawn True Corporation Public Company Limited's B2 corporate family rating with a stable outlook.

 

RATINGS RATIONALE

 

Moody's has withdrawn the rating for its own business reasons. Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.

 

[asiaexpat]

While True is a leading company in Thailand I never buy a bond rated less than A by Moody, let alone a company B rated by Thai agency.