Thailand

The Living Dead

With the economic malaise caused by the pandemic more than likely to persist over the next few years, there is a higher possibility businesses will be stricken with a high-pitch fever, gradually turning them into zombie companies, the Bangkok Post reported. The term originated in Japan to describe companies that were only generating enough cash to pay interest on their debts, also meaning an uncompetitive company that needs a bailout to successfully operate. These companies do not earn enough to reduce the principal amount of their debt.

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Thai budget carrier Nok Airlines Pcl obtained court approval to proceed with a debt rehabilitation plan as it weathers a slump in passenger demand due to the coronavirus pandemic, Bloomberg News reported. The nation’s Central Bankruptcy Court said Nok Air should submit its plan by the first quarter of next year, the company said in an exchange filing Wednesday. The pandemic has devastated global aviation, forcing airlines to suspend flights, lay off employees and seek financial help from governments and investors.

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Nok Air looks set to be allowed to restructure under court supervision, after nobody raised objections during a court hearing today, according to a 27 October filing to the Stock Exchange of Thailand, FlightGlobal reported. The Thai budget carrier says the order on its business rehabilitation petition will be issued at 09:00 on 4 November by Thailand’s Central Bankruptcy Court, after which Nok will provide further details to the stock exchange. The court had accepted the company’s petition on 30 July and set the hearing for 27 October.

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A pandemic-exacerbated surge in Thai bad loans to nine-year highs and the end of a debt payment holiday are prompting buyers of distressed debt to embark on a shopping spree in Southeast Asia’s second-biggest economy, Reuters reported. About 6.89 trillion baht ($221 billion) of outstanding Thai debt - or 42% of total lending - has been under relief programmes that include payment deferment and reduction, interest rate reduction and restructuring. The most significant of these - a government-mandated six month debt payment holiday - ended on Thursday.

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Panel to Monitor Debt Restructuring

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) will spend three months monitoring the debt restructuring progress of small and medium-sized enterprises (SMEs), on a case-by-case basis, after the Bank of Thailand's debt relief measures in the second phase expire tomorrow, the Bangkok Post reported. Though the central bank will not prolong debt relief measures, the regulator encourages financial institutions to help borrowers who cannot pay debt normally to enter debt restructuring.

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Thailand’s central bank will not extend a broad-based debt moratorium but will introduce targeted measures to help debtors affected by the coronavirus pandemic, an assistant governor said on Friday, Reuters reported. Southeast Asia’s second-largest economy posted its deepest contraction in over two decades in the second quarter and the pandemic has battered tourism and domestic activity. The central bank will monitor the situation closely and did not expect rapid and large defaults after the six-month debt holiday ended on Thursday, Assistant Governor Roong Mallikamas told a briefing.

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The Thai central bank on Wednesday said in its weekly press conference that it was working out an additional debt restructuring package using targeted measures to help borrowers in a grim economy hit by the COVID-19 pandemic, Xinhuanet reported. The additional package is intended to improve the efficiency of existing measures and address borrowers' problem in a targeted manner, said Mathee Supapongse, assistant governor of the Bank of Thailand (BOT). The package will include a debt holiday, soft loans and other related measures, said Mathee.

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Thailand Set to Keep Rates at a Record Low

Thailand’s central bank is set to keep its benchmark interest rate unchanged at an all-time low Wednesday as it calls on the government to use fiscal stimulus to spur the pandemic-hit economy, Bloomberg News reported. All 22 economists in a Bloomberg survey predict the Bank of Thailand will keep the key rate at 0.5% after reducing it three times earlier this year. Policy makers are keen to preserve their limited ammunition to respond to any further downturn as the coronavirus pandemic weighs on global growth.

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The Central Bankruptcy Court decided yesterday that the airline can proceed with its plan to rehabilitate its debt, Thailand Business News reported. The plan is expected to be drawn up by early next year for approval by the court and Thai Airways’ creditors. It needs the endorsement of holders of at least 50% of the airline’s debt. The company, which had total liabilities of 332.2 billion baht at the end of June, faces one of the biggest challenges in its 60-year history as the Central Bankruptcy Court in Bangkok will investigate further in the airline’s accounts.

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Thai Airways International Pcl’s request to restructure its debt as part of bankruptcy proceedings was approved by a bankruptcy court on Monday, sending its share price sharply higher, Reuters reported. The decision by the court, which handles bankruptcy and restructuring requests in Thailand, allows the airline to move ahead with drawing up plans to restructure 245 billion baht ($7.83 billion) worth of debt. It comes as the coronavirus fallout has added to the woes of the airline, which has been struggling since 2012 and in which the government has a large stake.

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