AP plans to issue B2.5bn bond to cut costs

BackJul 24, 2007

The listed developer Asian Property Development Plc (AP) is issuing debentures worth 2.5 billion baht to reduce its financial costs, according to chief executive Anuphong Asavabhokin. He said that issuing the senior unsecured debentures would generate cash flow and allow the company to refinance its bank loans. Currently, its financial cost stands at about 6%, compared to 5% for the debenture issue.

''Many state enterprises are refinancing by borrowing from domestic sources and many listed firms are waiting to issue debentures in the second half of the year. If the supply increases, the spread will expand,'' he said.

AP will offer the debentures to institutional and individual investors, with TMB Bank and Siam Commercial Bank as sales managers.

The issue would involve two lots: one with a maturity of three years and a coupon rate of 4.9% and the other with a four-year maturity and a 5.3% coupon rate. Interest would be paid every quarter.

''The market outlook will be better after the new election despite declining interest rates. But we expect the interest rates to pick up in 2008, as the economy will improve,'' Mr Anuphong said.

''There are both advantages and disadvantages to the stronger baht. While it hurts exporters, it helps cap oil prices. But if it keeps strengthening and the government cannot control the situation and the economy crashes, then the property sector will also crash.''

In the second half of the year, AP plans to launch five projects worth 3.55 billion baht. They include the Life

 

Bangkok Post by Kanana Katharangsiporn
Tuesday July 24, 2007