The Thai securities house has lost its position as the top structured products provider in the country in 1H 21 despite a surge in issuance and sales year-on-year (YoY).
Kiatnakin Phatra Securities (KKPS) raised THB8.3 billion (US$252.5m) across 1,616 structured notes sold in the first half of 2021, registering a strong rebound from a historical low a year ago. The securities house’s net profit also increased 16.9% to THB883.9m groupwide during the first six months of the year.
Its structured products issuance saw a 72.9% climb year-on-year, but was still at a distance from the level seen in H1 19 – THB12.4 billion, according to SRP data.
Despite the interim growth, its top position on Thailand’s issuer ranking was taken by Krung Thai Bank, which collected THB26.3 billion across just 58 structured notes that included several big tickets in H1 21.
In terms of outstanding balance, KKPS recorded THB1.9 billion for its autocallable notes with a tenor of no longer than 270 days, known as short debentures, and THB1.6 billion for other structured notes, or long debentures, according to its H1 21 financial reports.
The liabilities had a cost of 0.5% annualised interest rate, which was at the same level recorded six months ago but represented a 0.75% decrease from a year ago at KKPS.
The firm’s notes had no exposure to foreign exchange (FX) risk, which was last seen back in H2 19 when KKPS had structured note payables at US$2.12m at the year-end.
In the meantime, the Thai securities house, headed by CEO Aphinant Klewpatinond (pictured), posted derivatives assets and liabilities at THB80m and THB52m respectively as at 30 June. These incorporated the embedded derivatives from structured notes when their ‘economic characteristics and risks’ are not closely related to the economic characteristic and risk of host contract’.
The entire structured note and derivative liabilities held by the firm will mature within one year, according to the financial report.
For the long debentures, the matured payable reached a record high at THB184.5m in H1 21 compared with the THB21m a year ago and the THB148m two years ago. Meanwhile, the receivables surged to THB146.7m, tripling those YoY.
Underlying
KKPS has noticeably shifted its underlying sector preference in H1 21 compared with the same period of 2020. The oil and gas sector returned to the spotlight on the back of 240 structured notes, compared to 70 such products linked to the sector in H1 20.
Trailing behind was retail and food & beverage shares, which were featured across 133 and 132 products, respectively.
Healthcare and utilities shares, which were the most utilized during H1 20 slipped out of the top five sectors ranking while travel & leisure remained in focus.
The stocks of the Airport of Thailand (AOT), a traditionally favoured domestic underlying choice, only appeared in 17 structured notes during 1H 21, down from 82 in H1 20.
The change was also reflected in the whole structured note market as only seven issuers deployed this underlying which appeared in 456 products, more than half of which were marketed by SCB Securities.
There were 189 structured notes linked to the AOT share in H1 20 amid a 43% plunge of issuance countrywide, offered by 11 local banks and securities houses.