Bonds Available On Set Starting Today

[george]

Bonds available on SET starting today

Small investors can shop for 21 issues

BANGKOK: Corporate debentures worth 141 billion baht will be listed on the Stock Exchange of Thailand today under a new programme giving retail investors the ability to trade bonds in the market.

Twenty-one debenture issues from six companies will be listed today, with the number of securities available expected to rise to 30 by the first quarter of 2004, according to Kesara Manchusree, vice-president of the SET's financial instrument market project.

Bond trading has typically been the province of institutional investors, such as banks, insurers or mutual funds in over-the-counter market deals through the Thai Bond Dealing Centre.

In contrast, investors buying through the SET can purchase or sell debentures through their brokers in a process similar to that used for trading of stocks, warrants or listed unit trusts.

Clearing and settlement is on a T+2 basis. Clearing is to be handled through the Thailand Securities Depository.

Mrs Kesara said the launch of bond trading on the SET would help boost liquidity for corporate debentures as well as give investors another option for managing their investments.

Each trade must be for a minimum of one board lot, equal to 100 units or a par value of 100,000 baht. The maximum trade is 10,000 units, or 10 million baht.

Prices will be quoted with a bid-offer spread of one satang, with no floor or ceiling limits imposed.

Mrs Kesara said investors could execute trades either by using the automatic matching system of the SET or by using put-through transactions, where buyers and sellers negotiate prices and terms before settlement through the exchange.

Commission fees for debenture trades are freely negotiable with brokers.

The start of the new trading board will feature eight debentures issued by Siam Cement, seven from Advanced Info Service, two each from Thai Airways and National Finance and one each from Shin Corp and Krungthai Card.

``Each of the debentures listed carry a credit rating ranging from AA- to A-,'' Mrs Kesara said. ``Overall, the time-to-maturity of the debentures range from three to five years.''

Mrs Kesara urged investors to consider carefully before entering into the bond market.

``Investors should study everything dealing with debt instruments, as well as the factors affecting pricing, before thinking about investing,'' she said.

Supakorn Soontornkit, a senior strategist at MFC Asset Management, said liquidity on the SET was unlikely to be heavy in the early stages.

He said the real benefit was the ability for institutional investors to access the market. The SET would help improve efficiency and price transparency to the bond market, now over 90% dominated by institutional trading.

``Before, the bond market was basically a black market, with each participant settling deals among themselves,'' Dr Supakorn said.

He downplayed any fears that the bond market could be open to manipulation, noting that most investors were not buying bonds for speculation, but rather to capture yields.

``Bonds are not easy to manipulate. Once prices fall to a certain point, yields rise and the market corrects,'' Dr Supakorn said, adding that government bonds should be added to the local stock market as well.

--Bangkok Post 2003-11-26

[Butterfly]

hehehe, so they are issuing corporate bonds for large firms to refinance their debt or decrease their shareholders equity. guess which company is inline first ? that's right, AIS

[Guest IT Manager]

OMG Butterfly, are you saying the company not owned by anyone in a poitical office is being pushed by persons un-named?

[en184]

Debt can either decrease or increase a shareholders equity. A prudent use of debt, can greatly increase return on equity.

Only when debt is unproductively used, does it decrease shareholder equity.

[pokie]

So where does one find a broker? want to get into a mutual fund .just want to dip my toe in.

[seykota]

Do some research first. Mutual funds, as a generalisation, suck. Look for Listed Investment Companies, better Buy / Sell spread, lower management fees, less institutional influence.

Also do not limit yourself to the Thai market as the Corporate Governance issues etc are still at infancy stage (read: SET a tad dodgy eg mkt manipulation.....) & smaller investors (punters) are the "patsies".

Many opportunities but do not rely on a broker.

regards pete