Thailand planning first fixed rate dollar bonds since 1997

Thailand is planning to issue its first fixed-rate dollar denominated bonds in the offshore market by the end of this year, the first time since 1997 that the Kingdom will issue such debt instruments, says the Thai Embassy in Washington DC. The Embassy says, the bonds will help fund the country’s new infrastructure projects as well as establish a sovereign benchmark for other Thai issuers entering the dollar bond market. “We think that it is our job to see that the Kingdom of Thailand is present in the international capital markets and we should have the benchmark for the private sector,” Chularat Suteethorn director general of the Public debt management office said that Thailand would become a ‘regular issuer’ of bonds and other debt instruments. Thailand did issue US$200 million in dollar bonds in 2006, but at a floating rate. The relatively small placement was handled mainly by Standard Chartered Bank. But Chularat said that Thai financial authorities had changed their view on the debt market because they felt the need for the sovereign to establish a benchmark for the private sector. The government has also issued several bonds in the domestic market. Analysts had voiced concerns, however, that by relying solely on the local funding for its water management and infrastructure projects, the government would be draining too much liquidity from the domestic market. Chularat downplayed those concerns and said there was ample liquidity in the local market. She pointed out that the bulk of the water management projects would be funded locally. “Since we have plans to invest both in water management and logistic infrastructure in the next seven years, amounting to 2trillion baht ($67billion), we also have to see the opportunity to tap money from outside (Thailand) and to have the plan ready in case there is some crowding out in the domestic market,” Chularat said. Although financial authorities are committed to issuing the bonds, they have yet to finalize details and were still in discussions with bankers. The government is considering all options from five-year to 30-year bonds, and has not decided on the issue date, although Chularat said it would definitely be this calendar year. She said that the government was also studying other types of debt instruments for the local market including zero-coupon bonds and various kinds of retail savings bonds. She said the Bank of Thailand used to issue a variety of savings bonds, and there was strong interest from the public in having access to those types of bonds again (Source).

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