Thai Beverage

Thai Beverage > Buy

DBS Group Research, March 23

March 23 close: S$0.805

Fair value: S$1.02

THAI Beverage (ThaiBev) announced that it has issued 50 billion baht (THB) in debentures. The debentures have various terms from two years to 10 years, with fixed coupon rates ranging from 1.79 per cent to 3.6 per cent, implying weighted average rates of 2.83 per cent and an average tenor of just over six years.

The seven-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 per cent of the principal amount.

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.

The weighted average coupon rate works out to 2.83 per cent per annum and a weighted average tenor of just over six years, which we believe is attractive and indicates the market's confidence in the group's financial standing.

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