Bond Issuance Strategies of Real Estate Development Companies Listed on the Stock Exchange of Thailand Before and After COVID-19 from 2018 to 2024

Abstract

Housing developers are major issuers in the Thai debt market, particularly amidst COVID-19 funding constraints. This study examines the bond issuance strategies of 31 developers listed on the Stock Exchange of Thailand (2018–2024). Utilizing 56-1 One Reports and SEC debt filings, the research analyzes revenue compositions and bond structures to identify the relationships between firm size, residential project types, and issuance strategies.

Empirical findings indicate that: 1) Average high-rise revenue proportions were 35%, 33%, and 43% for large, medium, and small firms, respectively. Small firms derived 38% from low-rise projects and 19% from diversification, increasing cash flow volatility. 2) Regarding issuance objectives, during stable periods, small and large firms prioritized expansion (35% and 33%), while medium firms focused on liquidity (34%). Following 2019 Loan to Value (LTV) regulations, medium and large firms prioritized liquidity, whereas small firms focused on refinancing from 2023. 3) Regarding bond characteristics, since 2019, zero-coupon short-term bonds were used across all sizes to minimize costs. During and after the pandemic, medium and large firms leveraged these instruments at 70% and 81%, versus 49% for small firms. Consequently, small firms were required to issue higher-yield short-term and long-term bonds to attract investors, increasing average financial costs.

In conclusion, large and medium firms consistently issue bonds at lower costs than small firms across economic cycles. To mitigate rollover risks, small firms rely on diverse, high-yield instruments, increasing financial costs and hindering performance. These insights assist developers in optimizing project-mix portfolios to effectively manage financial costs and risks amidst economic fluctuations.