SINGAPORE (Sept 20): ThaiBev announced that it had issued THB77 billion ($3.3 billion) in debentures after the company last month announced it was looking to issue debentures to replace its short-term debts.
This refinancing move and fixing of coupon rates should allay investors' concerns on the group’s exposure in light of the rising interest rate environment, say analysts.
“We estimate that the group will be able to deleverage its balance sheet progressively over time given its strong operating cashflows,” says DBS Group Research analyst Andy Sim in a Thursday report.
Looking ahead, DBS is maintaining its view that ThaiBev is near or at the bottom of its operational performance, which should pick up in FY19.
“This is on the back of the expected Thailand elections and King’s coronation,” says Sim, “According to the media, the Thai government has indicated that elections will be held on Feb 24 2019.”
Similar to earlier issuances, the debentures come in tenures of two years four months, three years six months, five years, seven years and 10 years with fixed coupon rates ranging from 2.64% for two years four months to 4.16% for 10 years.
The weighted average coupon from the current issuance works out to about 3.42%, and the estimated weighted average tenure is 5.24 years.
One of the 10-year debentures -- issue size of THB13.7 billion, coupon rate of 4.16% -- has been structured with a call option from the seventh anniversary of issuance, with a redemption fee of 0.2% of the principal amount if the issuer exercises the right.
Total debentures issued now total THB127 billion, average fixed coupon of 3.19%. Including the THB50 billion issued earlier in March, the group has now issued THB127 billion, with the proceeds to be used to refinance the loans undertaken last December for the acquisition of Sabeco.
“Including the latest issuances, the weighted average fixed coupon rate is 3.19%, which we have taken into our forecasts,” says Sim.
As at 11.18am, units in ThaiBev are trading at 66 cents or 12.9 times FY20F EPS of 5.13 cents.
