Bangkok, Jun 1-Many debentures at this time have defaulted on payment. The Securities and Exchange Commission (SEC) has advice.
“What to do if the bonds purchased are in default?” One of the major risks of bond investment is the risk of default of the bond issuing company. where the issuer is unable to pay principal or interest as scheduled Including the case that the issuer is unable to pay the debt due to being called to pay the debt immediately (call default), which can happen.
When there is a default on payment Bondholders will have “Bondholder Representative” is like a representative of each generation of bondholders. have a duty to demand payment of debts Mandatory collateral and claims for damages to bondholders Including being a center for providing various information to investors as well The bondholders' representative may need to hold a bondholders' meeting to seek approval for various actions, such as requesting an extension of the repayment period. sue for compulsory payment or forcing collateral. Therefore, bondholders should follow news from bondholder representatives. and must use the right to attend meetings to protect their own interests as well Including should study the meeting documents thoroughly and attended the meeting in person to ask questions about the debenture issuer and always carefully analyze the information before making a decision to vote to protect their own rights and interests in the best possible way
1. How to know which debenture series? Who is the debenture holder representative?
Bondholders can view the bondholders' representative's information from the factsheet section of the instrument's characteristics. or the cover page of the information offering for sale of bonds (filing). from the SEC Bond Check application or the office's website SEChttps://market.sec.or.th/public/idisc/th/Product/Filing
2. When debt repayment is required How should investors prepare?
When the bondholders' meeting passes a resolution or debenture holder representatives use discretion to decide to enforce debt repayment The debenture holder's representative will be the person who assists in the litigation for the enforcement of the collateral. (in the case of secured bonds) or compulsory debt repayment on behalf of all bondholders And will be responsible for the issuer to pay off all outstanding debt as soon as possible. The names of all debenture holders will appear in the latest register. And bondholders should prepare documents for proof of bond ownership. If necessary, confirmation of bond holder status is required.
3. Are secured bonds and unsecured bonds different?
If it is a secured debenture holder, they will have the right to claim for debt repayment from the assets used as collateral. There will be a process for enforcing collateral, such as auctioning. and for unsecured bondholders Generally, bondholders in this group have rights equal to general creditors of the company. There will be a process for suing for debt repayment. This group of debenture holders will have the right to claim other assets that are free from the Company's obligations. The assets must be divided with other creditors according to the rights and proportion of the debt. whether secured debentures or general debentures The bondholders' representative will act for the bondholders.
4. In what order will each type of bondholders receive repayment?
Debenture investors are creditors of the company. have the right to receive payment before ordinary shareholders who are owners of the business who have the last right to receive payment For secured bondholders will have the right to receive repayment before the unsubordinated debentures and unsecured debentures. Investors can check the repayment order of the debentures they hold from the factsheet of the debentures.
5. How can investors monitor the progress of collateral enforcement or debt repayment?
Bondholders can monitor the progress of the performance of debt repayment from "Debenture holder representative", who is the center for providing various information to investors
Although investing in bonds is less risky than stocks. And in addition to the risk of default on the debt of the debenture issuer There are also liquidity risks and price risks. The SEC therefore urges bond investors to study the information in order to understand the risks and returns. and allocate investments appropriate to the risks that can be accepted.-Thai News Agency
Source: Thai News Agency