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WorldOctober 2 2017

Thai corporates spread their wings

Ever since the Asian financial crisis in 1997, Thai companies have been steadily expanding abroad. They have been helped in no small part by their easy access to the capital markets, though often with a reliance on the large multi-national banks as opposed to their domestic counterparts. Peter Janssen reports.
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Siam Cement Group (SCG), Thailand’s largest industrial conglomerate, was hit hard by the 1997 Asian financial crisis. Like most Thai companies at that time, SCG had not sufficiently hedged against foreign exchange fluctuations (the Thai baht lost half its value in a few months) and was highly leveraged. “After the Asian crisis, the balance sheet of the parent company looked so bad because we had acquired a huge foreign debt,” says Chaovalit Ekabut, SCG’s current chief financial officer.

In an effort to diversify financing away from only banks, the group offered debentures on one of its more profitable subsidiaries, instead of on the shaken parent company. “We were actually the first Thai corporation to issue debentures, just one or two years after the crisis,” says Mr Ekabut.

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