TMB Bank Public Company Limited or TMB announced a liquidity support scheme available to the unit holders of two TMBAM Eastspring’s funds, namely TMB Ultra – Short Bond Fund (TMBUSB) and TMB Aggregate Bond Fund (TMBABF). The aim is to help customers in every segment from Covid-19 impact.
Apart from the Covid-19 financial support packages provided for both retail customers and commercial customers affected by the virus outbreak, TMB has announced the additional relief program offered to TMBAM Eastspring’s customers. This program was released after the fund house announced that it would suspend the purchases and redemptions of TMBUSB and TMBABF.
Mr. Piti Tantakasem, Chief Executive Officer, said “Although TMB currently holds only a 35% stake in TMBAM Eastspring, it is our intention to take care all of our customers in every segment, affected from Covid-19 pandemic, especially, retail investors. Therefore, we have prepared the financial support program to aid all mutual fund investors who hold TMBUSB and TMBABF. This program is offered to all unit holders, covering for both unit holders who are TMB customers and those who are not TMB customers. Therefore, if the investors are in need of short-term liquidity, they can use their investment units as collateral for loans under this program. We believe that this program will help investors who have liquidity difficulty during the process of fund liquidation. While TMBAM Eastspring will receive the proceeds from bonds that will reach maturity in the near term and the sales of the bond portfolios which consist of good-investment-grade debt securities in global market in order to pay back to all unit holders.
Mr. Piti Tantakasem mentioned further “For the case of these two funds, according to TMBAM Eastspring’s announcement, the two funds are quite unique from other bond funds in the industry as majority of the ports are foreign debt instruments whereas Thailand’s mutual fund industry including bond funds remains fundamentally strong. In addition, with the BOT’s liquidity measures to support money market fund and daily fixed income fund would help stabilize financial market during Covid-19 pandemic.
TMB and Thanachart Bank’s customers can be assured that there is no effect to the Banks’ normal operations. The Banks are well-prepared in terms of liquidity, capital and operational systems to handle and operate under this unusual situation.”
From TMB Eastspring’s announcement, the Covid-19 pandemic created fluctuation in the financial market around the world. Not only equity market but also money market and bond market are also facing panic selling situation.
Even though, TMBUSB and TMBABF have the policy to invest in investment-grade bond locally and globally, the panic selling during thin demand market is pushing the prices of securities down deeply and rapidly and does not reflect the good quality of assets in the mutual fund portfolios.
However, to stop the panic selling situation, our bond experts in TMBAM Eastspring had adjusted the strategy by extending the redemption period but could not slow the outflows. As a result, the fund house announced the suspension, closure and liquidation of the two funds mentioned earlier. Its ultimate goal is to protect investment value for customers under panic selling situation. Thereafter, the fund house will sell the remaining debt instruments in the portfolios at the most appropriate prices for the best interest of customers, and the proceeds will be distributed back to all fund unit holders.