BANGKOK--JUL 11--TRIS
THAI RATING AND INFORMATION SERVICES (TRIS) ANNOUNCED THURSDAY, 11
JULY 1996, A CREDITALERT WITH "NEGATIVE" IMPLICATIONS FOR RATINGS IN THE
THAI PROPERTY DEVELOPMENT INDUSTRY. TRIS NOTED THAT PROPERTY DEVELOPMENT
HAS BEEN IN A DIFFICULT SITUATION OVER THE PAST YEAR, BECAUSE OF THE
SLUGGISH PROPERTY MARKET, HIGH INTEREST RATES AND THE BANK OF THAILAND'S
STRICTER POLICY ON LENDING. COMPETITION REMAINS INTENSE AND OVERSUPPLY
STILL CONTINUES, ESPECIALLY IN THE RESIDINTIAL SECTOR. SEVERE FLOODING IN
LATE 1995 DELAYED CONSTRUCTION AND DELIVERIES AND ALSO SLOWED CONSUMERS'
PURCHASING DECISIONS. A PROLONGED WEAK STOCK MARKET HAS ALSO AFFECTED
PROPERTY MARKET SENTIMENT.
THE DEPRESSED PROPERTY MARKET HAS DIMINISHED DEVELOPERS'
CAPABILITIES TO SERVICE THEIR FINANCIAL OBLIGATIONS. MANY SMALL-SIZED AND
NON-LISTED DEVELOPERS HAVE FAILED TO COMPLETE PROJECTS AND HAVE BEEN
FORCED TO EXIT THE MARKET. UNFACORABLE FACTORS ALSO AFFECT LARGER, LISTED
DEVELOPERS. EXCESS SUPPLY REMAINS IN SOME SEGMENTS, PARTICULARLY IN
LOWER-PRICED RESIDENTIAL PROJECTS. SALES HAVE SLOWED AND CASH FLOW HAS
BECOME DISTRESSED. A NUMBER OF LISTED COMPANIES HAVE RAISED FUNDS MAINLY
TO PAY THEIR HIGH INTEREST BURDENS, WHILE SOME DEVELOPERS SOLD ASSETS TO
IMPROVE CASH FLOW AND OBTAIN LIQUIDITY. TO ENHANVE THE COUNTRY'S
FINANCIAL SOUNDNESS, THE BOT TIGHTENED CONTROLS ON FINANCIAL INSTITUTIONS,
REQUIRING INCREASED CAPITAL BASE AND INTRODUCING LIQUIDITY MAINTENANCE FOR
SHORT-TERM FOREIGN FUNDING. CREDIT APPROVALS ESPECIALLY FOR THE PROPERTY
DEVELOPMENT SECTOR ARE MORE CAUTIOUS AND SELECTIVE. WITH THE CURRENT MLR
OF ABOUT 13.75%, INTEREST RATES REMAIN HIGH AND PUT MORE PRESSURE ON
DEVELOPERS' COST OF CAPITAL. HOWEVER, INTEREST RATES ARE EXPECTED TO
DECREASE BY THE END OF THIS YEAR.
THE NEGATIVE OUTLOOK OF THE PROPERTY INDUSTRY MAY AFFECT THE
CREDIT QUALITY OF QUALITY HOUSES PLC AND PROPERTY PERFECT PLC. TRIS WILL
REVIEW THEIR BUSINESS AND FINANCIAL RISKS TO DETERMINE THE CURRENT
SITUATIONS IMPACT ON THEIR RATINGS. END.
NOTE: CREDITALERT, AS PART OF TRIS'S MONITORING PROCESS, IS A PUBLIC
WARNING ISSUED BY TRIS, WHEN THERE IS INSUFFICIENT INFORMATION TO
FULLY ASSESS AND RECONSIDER A DEBT INSTRUMENT'S CURRENT RATING OR WHEN
SIGNIFICANT EVENTS MAY AFFECT THE COMPANY'S RATING ALREADY ASSIGNED BY
TRIS BECAUSE OF CHANGING BUSINESS CONDITIONS. CREDITALERT DESIGNATIONS MAY
BE "POSITIVE", "NEGATIVE" OR "DEVELOPMENT", DEPENDING ON THE LIKELY IMPACT
OF A PARTICULAR SITUATION. THE EXISTING RATING CONTINUES UNCHANGED FOR
THE PRESENT, MONITORING IS DONE UNTIL THE DEBT INSTRUMENT MATURES OR THE
COMPANY'S RATING CONTRACT EXPIRES.
THAI RATING AND INFORMATION SERVICES (TRIS) ANNOUNCED THURSDAY, 11
JULY 1996, A CREDITALERT WITH "NEGATIVE" IMPLICATIONS FOR RATINGS IN THE
THAI PROPERTY DEVELOPMENT INDUSTRY. TRIS NOTED THAT PROPERTY DEVELOPMENT
HAS BEEN IN A DIFFICULT SITUATION OVER THE PAST YEAR, BECAUSE OF THE
SLUGGISH PROPERTY MARKET, HIGH INTEREST RATES AND THE BANK OF THAILAND'S
STRICTER POLICY ON LENDING. COMPETITION REMAINS INTENSE AND OVERSUPPLY
STILL CONTINUES, ESPECIALLY IN THE RESIDINTIAL SECTOR. SEVERE FLOODING IN
LATE 1995 DELAYED CONSTRUCTION AND DELIVERIES AND ALSO SLOWED CONSUMERS'
PURCHASING DECISIONS. A PROLONGED WEAK STOCK MARKET HAS ALSO AFFECTED
PROPERTY MARKET SENTIMENT.
THE DEPRESSED PROPERTY MARKET HAS DIMINISHED DEVELOPERS'
CAPABILITIES TO SERVICE THEIR FINANCIAL OBLIGATIONS. MANY SMALL-SIZED AND
NON-LISTED DEVELOPERS HAVE FAILED TO COMPLETE PROJECTS AND HAVE BEEN
FORCED TO EXIT THE MARKET. UNFACORABLE FACTORS ALSO AFFECT LARGER, LISTED
DEVELOPERS. EXCESS SUPPLY REMAINS IN SOME SEGMENTS, PARTICULARLY IN
LOWER-PRICED RESIDENTIAL PROJECTS. SALES HAVE SLOWED AND CASH FLOW HAS
BECOME DISTRESSED. A NUMBER OF LISTED COMPANIES HAVE RAISED FUNDS MAINLY
TO PAY THEIR HIGH INTEREST BURDENS, WHILE SOME DEVELOPERS SOLD ASSETS TO
IMPROVE CASH FLOW AND OBTAIN LIQUIDITY. TO ENHANVE THE COUNTRY'S
FINANCIAL SOUNDNESS, THE BOT TIGHTENED CONTROLS ON FINANCIAL INSTITUTIONS,
REQUIRING INCREASED CAPITAL BASE AND INTRODUCING LIQUIDITY MAINTENANCE FOR
SHORT-TERM FOREIGN FUNDING. CREDIT APPROVALS ESPECIALLY FOR THE PROPERTY
DEVELOPMENT SECTOR ARE MORE CAUTIOUS AND SELECTIVE. WITH THE CURRENT MLR
OF ABOUT 13.75%, INTEREST RATES REMAIN HIGH AND PUT MORE PRESSURE ON
DEVELOPERS' COST OF CAPITAL. HOWEVER, INTEREST RATES ARE EXPECTED TO
DECREASE BY THE END OF THIS YEAR.
THE NEGATIVE OUTLOOK OF THE PROPERTY INDUSTRY MAY AFFECT THE
CREDIT QUALITY OF QUALITY HOUSES PLC AND PROPERTY PERFECT PLC. TRIS WILL
REVIEW THEIR BUSINESS AND FINANCIAL RISKS TO DETERMINE THE CURRENT
SITUATIONS IMPACT ON THEIR RATINGS. END.
NOTE: CREDITALERT, AS PART OF TRIS'S MONITORING PROCESS, IS A PUBLIC
WARNING ISSUED BY TRIS, WHEN THERE IS INSUFFICIENT INFORMATION TO
FULLY ASSESS AND RECONSIDER A DEBT INSTRUMENT'S CURRENT RATING OR WHEN
SIGNIFICANT EVENTS MAY AFFECT THE COMPANY'S RATING ALREADY ASSIGNED BY
TRIS BECAUSE OF CHANGING BUSINESS CONDITIONS. CREDITALERT DESIGNATIONS MAY
BE "POSITIVE", "NEGATIVE" OR "DEVELOPMENT", DEPENDING ON THE LIKELY IMPACT
OF A PARTICULAR SITUATION. THE EXISTING RATING CONTINUES UNCHANGED FOR
THE PRESENT, MONITORING IS DONE UNTIL THE DEBT INSTRUMENT MATURES OR THE
COMPANY'S RATING CONTRACT EXPIRES.