Thai Beverage Public Company (THBEV SP) - DBS Research 2018-03-23: Favourable Fixed Coupon Rate

Thai Beverage Public Company (THBEV SP) - DBS Vickers 2018-03-23: Favourable Fixed Coupon Rate THAI BEVERAGE PUBLIC CO LTD Y92.SI

Thai Beverage Public Company (THBEV SP) - Favourable Fixed Coupon Rate

  • Issued debentures amounting to THB50bn.
  • Weighted average fixed coupon rate of 2.83%.
  • Positive development given favourable rates. 
  • Further catalyst to come from clarity of synergies, better operating performance.

What’s New 

ThaiBev announced that it has issued debentures for an aggregate amount of THB50bn. 

  • The debentures have various terms from 2 years to 10 years, with fixed coupon rates ranging from 1.79% to 3.6%, implying weighted average rates of 2.83% and average tenor of just over 6 years.

Longer term debentures have call option for early redemption. 

  • The 7-year and 10-year debentures (maturing in 2025 and 2028, respectively) are structured with a call option granting ThaiBev early redemption rights starting from the fifth anniversary, but carries a redemption fee of 0.2% of the principal amount.

Our Views 

A positive development. 

  • In our view, albeit small, this is a positive development for the counter. This is in line with management’s earlier indication to refinance half of the short term THB debts undertaken for the acquisition of Sabeco’s stake this year, and the remaining in 2019 with debentures.

Favourable coupon rates, weighted average of c.2.83%.

  • The weighted average coupon rate works out to 2.83% per annum and a weighted average tenor of just over 6 years, which we believe is attractive and indicates the market’s confidence in the Group’s financial standing. It also provides better clarity on its interest exposure. 
  • In fact, with the longer term debentures (7-year and 10-year issues) structured with a call option for early redemption, our reading is that this provides flexibility and shows management’s confidence in the cashflow of the Group.
  • We continue to adopt our positive stance on the counter given its transformation into a regional F&B player, and share price catalysts may arise from better clarity on the potential synergies, deleveraging plans and tangible results from its recent acquisitions.

Andy Sim CFA DBS Vickers | Alfie YEO DBS Vickers | http://www.dbsvickers.com/ 2018-03-23
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