ThaiBev issues $2.1b debentures to refinance Sabeco debt

Analysts think its average coupon rate of 2.83% per annum and average tenor of just over six years is attractive.

ThaiBev issued debentures for an aggregate amount of $2.1b (THB50b). The debentures have various terms from two 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 six years.

DBS Equity Research Andy Sim noted that that, 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,” he added.

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 carry a redemption fee of 0.2% of the principal amount.

Sim also noted that the weighted average coupon rate of 2.83% per annum and average tenor of just over six years is attractive and indicates the market’s confidence in the ThaiBev’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,” he added.

The analyst adopted a positive stance on the counter given its transformation into a regional F&B player. Also, “share price catalysts may arise from better clarity on the potential synergies, deleveraging plans and tangible results from its recent acquisitions,” Sim said.

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