Sukhumvit Asset Management Co Ltd (SAM) is in the process of issuing debentures worth 2.5 billion baht as part of a plan to purchase bad assets next year.
The company assumes non-performing loans (NPLs) in the banking industry will be higher next year because of an uneven economic recovery.
SAM wants to raise 2.5 billion baht through the issuance of senior unsecured debentures with a seven-year maturity. The debentures are affirmed at an AA+ credit rating with a stable outlook by Tris Rating. The subscription period is set for December.
The proceeds will be used for business expansion and existing debt repayment, said president Tharatporn Techakitkachorn.
SAM, Thailand's second-largest asset management company, plans to prepare a budget of 6 billion baht to buy both NPLs and non-performing assets (NPAs) from financial institutions in 2023, he said.
The budget could be increased based on the bad asset outlook in the banking sector, said Mr Tharatporn.
The Bank of Thailand decided to discontinue some financial assistance measures, which could result in bank customers becoming NPLs based on normal conditions, said Mr Tharatporn.
Small and medium-sized enterprises (SMEs) are expected to make up the majority of businesses classified as NPLs next year because of their fragility, he said. Businesses also face global economic uncertainties next year and a trend of rising interest rates, said Mr Tharatporn.
SAM maintained its policy on bad debt management by focusing on secured loans, particularly SME loans, to help the banking system manage distressed debts.
He said as interest rates rise, it is a suitable time for SAM to offer debentures in order to achieve low financial costs. SAM conducted a virtual roadshow of the debenture offering with institutional and high net worth investors, receiving a positive response, said Mr Tharatporn.
The sale of NPLs in the banking sector averages 100 billion baht per year and SAM aims to buy around 10% of those bad debts.
The company expects to purchase bad assets from financial institutions tallying more than 10 billion baht this year, he said.
As of October, SAM's NPLs under management tallied 375 billion baht from 22,000 customers, while NPAs managed totalled 23 billion from 4,300 clients.
