Previously the 5 requirements for reinstatement of a REHABCO company which have been effective since 28 March 2003 consisted of:
- A company must have positive shareholders’ equity
- A company must show a profit from operations of its core business for 3 consecutive quarters or one year
- A company must have more than 75% of its debt restructured and is able to service the debt when due
- A company must have the cash flow from operations after realizing the interest expenses greater than zero
- A company must maintain a stable financial standing and operational performance
However, after the SET Board has adjusted the aforementioned rules, the REHABCO companies that are sufficiently healthy will be able to reinstate back to their normal sectors without having to be concerned whether their CFO must be positive only.
“Since the SET Board considered that the CFO rule is neither a major nor the only factor utilized to judge whether a company has good liquidity or financial standing, and hence be the determining factor as to whether the company is healthy enough to reinstate back, the rule could and should be changed. A negative CFO may be a result of many other factors. Presently many companies having their debts completely restructured and resuming normal operations may need to expand in various aspects which may lead to a negative CFO. Additionally, considering overall cash flows of a company will better provide the big picture of its financial positions,” the SET’s EVP said.
The SET Board of Governors has also approved the bond market development plan as well as the extension of the debentures listing fee waiver from the previous due date of 31 March 2004, to until the end of 2005. This is aimed at encouraging more debentures to list on the Exchange.
“The SET Board has passed an approval to the bond market development plan, which emphasizes 5 key areas: increasing the number of investors, increasing the number and variety of debt instruments, improving the trading system and access to information, developing investment information, and educating relevant parties about the debentures,” Mrs. Patareeya said.
The main operational plan will include increasing the number of member companies trading debentures and opening more access to institutional investors e.g. banks and mutual funds, to send orders directly. In enhancing the liquidity, the SET will liaison with the banks and securities companies so that all concerned can better work together as market makers. A study on the capital gain tax exemption on the gain from debenture trading will also be conducted to promote more trading and increase the number of investors in the market.
On increasing the quantity and array of products, the SET has established a marketing team to promote a greater number and types of products. In addition to the debentures, such other products as convertible debentures will be promoted. How to list bonds issued by the government sector and international organizations is also currently under study.
“To provide more information services to investors, the SET will increase the number of computer monitors assigned to members from the current 100 to 300 monitors. Internet trading of bonds will also be developed. The real-time data from the bond market will also be shown on the SET Smart program as well as the SET’s website, in addition to the real-time tickers distributed on the iTV channel. These plans will all commence this year. As far as investor education is concerned, new activities and educational medias will continually be produced,” The SET’s EVP said.
As well, the SET Board has approved a plan to develop the bond market on a longer-term basis, so as to enable it to cope with the higher number of bonds from both the government and private sectors as well as to better compete with the international secondary markets.
“The Board considers that a secondary market for bonds in Thailand must adjust itself to cope with the growing number of bonds issued by the government as well as the Asian bonds, which the Ministry of Finance successively sells to the public. Therefore, if there’s no available and competent system in place, those growing numbers of bonds may turn to list and use the services of overseas secondary markets instead,” Mrs. Patareeya said.
The Corporate bond market commenced its trading on 26 November 2003 with debentures from 7 listed companies which totaled THB 152,648 million. Currently there are 4 securities companies as active traders. They are SCB Securities, KGI Securities (Thailand), National Securities, and ABN Amro Asia Securities. The most actively traded debentures are those issued by SCC Public Co., Ltd.