Chairwoman of the Capital Market Opportunity Center (CMOC) and the Market for Alternative (MAI), Ms. Sopawadee Lertmanaschai, disclosed that the SET Board of Governors has approved the trading of bonds issued by listed companies which include debentures, convertible debentures, and debenture warrants sold in public offerings. This is another alternative and mechanism to help facilitate investors as well as listed companies.
"Presently more than 50 listed companies have issued debt instruments worth over 500,000 million baht in total, proving that trading corporate bonds will help provide a market for exchanging instruments with higher flexibility. Also, it will make the Exchange a more efficient source for fundraising of listed companies in addition to the issuance of equity instruments, as well as increase the Exchange's competitiveness among global markets by providing more products like the bonds issued by corporate sectors," Ms. Sopawadee said.
She also said that previously trading of bonds is done through the negotiation between the buyers and sellers and the minimum trading prices are usually high, thus impede the trading of debt instruments with smaller funds. On the other hand, investors investing in the debt instruments on the Exchange will be able to send trading orders similar to the trading of other securities through their accounts opened with member companies. We then believe this will be one way to expand the investor base, so the SET will organize educational activities for investors prior to inaugurating the trading.
Mrs. Kesara Manchusree, Vice President- Financial Instruments Market Project, disclosed that: "Now, the overall work system for bond trading is ready. These include the trading system, clearing and settlement, and price reporting system. Trading is expected to begin at the end of this October having the debentures of Siam Cement Plc. (SCC) as the first debentures on the market. There will be eight batches of SCC's debentures traded amounting to over 80,000 million baht in total."
Sending trading orders for debentures will be similar to that of other securities on the Exchange. Orders will be submitted through marketing representatives of the securities companies who have registered with the Office of the SEC. One board lot is equal to 100 units of debentures. The brokerage commission will be fully negotiable. Clearing and settlement will be completed within two business days after the transactions, or T+2. Investors can deposit their securities certificates with the Thailand Securities Depository Co., Ltd (TSD) in the scripless system similar to depositing other securities.
Mrs. Kesara said that: "The prices per debenture unit is mostly set at a high par value of 1,000 baht. Therefore, although the trading units of debenture is set at 100 units per board lot, the total value for each trade will be as high as 100,000 baht. Investors should thus thoroughly consider their investment objectives as well as the characteristics of the debentures they would like to invest in. The SET will encourage disclosing information of details for each of the debentures issued by listed companies, such as price details, yields, and the trading turnover of those debentures."
"Therefore, people who are going to invest in debentures should carefully study all related information about the debentures as well as other kinds of debt instruments carefully before making investment. They should also monitor news likely to effect the debenture prices like the movement of domestic and foreign interest rates. Concerning returns from investing in the debt instruments, besides the interest and principal gained at maturity, investors may also gain from the price gap as well."
For price movement updates, please see www.set.or.th which will be updated every 15 minutes. News on issuing listed companies can also be viewed on that website. The SET is going to hold a seminar for general investors titled "You May Get Rich from Debentures" on Saturday October 4, 2003, 09:00 - 12:00, at the SET Building and will distribute free documents.
Relating to educating all related parties, the SET has organized a meeting for member companies in early September and will hold a seminar for listed companies titled "The New Frontier for Bond Trading in the Thai Capital Markets" on Wednesday September 24, 2003 at 9:00 - 12:00 at the SET Building. For more information, please see the SET website at www.set.or.th and Thailand Securities Institute's website at www.tsi-thailand.org that provide an e-learning service for visitors.
