Laos places pioneer bond in Thailand

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Central Bank of Laos

The small landlocked Southeast Asian nation of Laos is looking to fuel expansion by tapping Thailand’s capital markets for the first time by issuing a 1.5 billion baht ($50 million) bond for institutional investors, a move that has been planned since January.

The three-year bonds are due out May 30 and will carry a coupon rate of 4.5 per cent.

With the most developed capital market in the Mekong region, Thailand offers the most obvious choice for the poor still mostly agrarian nation, especially as it becomes increasingly successful in convincing foreign companies to raise funds through Thai bond and stock markets.

Laos currently does not have an investment rating from any major global rating agencies. Issuing the bond in baht and benefiting from the Thai investment  grades BBB+/Baa1/BBB makes it much cheaper for the communist nation to repay the debt.

Supported by sanguine economic growth projections, analysts believe that Thailand will be a healthy partner to complement Laos’ ambitions to lure investment. According to the Asian Development Bank, Laos is expected to grow 7.7 per cent in 2013 as resource-based industries, manufacturing and services continue to generate solid growth.

Thailand usually requires foreigners who wish to issue bonds on the capital to have a credit rating, but is waiving this requirement for Laos. Twin Pine Consulting Co Ltd (TPC), a Thai advisory firm, will be assisting the Lao government with the bond.

Likely to be a major beneficiary of the raised capital, hydro power facilities along Laos’ portion of the Mekong River have been drawn, a part of the country’s master plan to become ASEAN’s hydroelectricity hub and a scheme that closely mirrors that of Sarawak, the largest state of Malaysia.

Up to 70 hydroelectric dams along the Mekong River and its tributaries have been planned over the next decade, an increase from the previous but already significant estimate of 55.

At present, Laos has 16 major hydroelectric dams generating 2,560 megawatts of energy and 37 small-scale plants with a total capacity of 6.59 megawatts, according to the Vientiane Times.

 

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Reading Time: 2 minutes

Central Bank of Laos

The small landlocked Southeast Asian nation of Laos is looking to fuel expansion by tapping Thailand’s capital markets for the first time by issuing a 1.5 billion baht ($50 million) bond for institutional investors, a move that has been planned since January.

Reading Time: 2 minutes

central-bank-of-laos
Central Bank of Laos

The small landlocked Southeast Asian nation of Laos is looking to fuel expansion by tapping Thailand’s capital markets for the first time by issuing a 1.5 billion baht ($50 million) bond for institutional investors, a move that has been planned since January.

The three-year bonds are due out May 30 and will carry a coupon rate of 4.5 per cent.

With the most developed capital market in the Mekong region, Thailand offers the most obvious choice for the poor still mostly agrarian nation, especially as it becomes increasingly successful in convincing foreign companies to raise funds through Thai bond and stock markets.

Laos currently does not have an investment rating from any major global rating agencies. Issuing the bond in baht and benefiting from the Thai investment  grades BBB+/Baa1/BBB makes it much cheaper for the communist nation to repay the debt.

Supported by sanguine economic growth projections, analysts believe that Thailand will be a healthy partner to complement Laos’ ambitions to lure investment. According to the Asian Development Bank, Laos is expected to grow 7.7 per cent in 2013 as resource-based industries, manufacturing and services continue to generate solid growth.

Thailand usually requires foreigners who wish to issue bonds on the capital to have a credit rating, but is waiving this requirement for Laos. Twin Pine Consulting Co Ltd (TPC), a Thai advisory firm, will be assisting the Lao government with the bond.

Likely to be a major beneficiary of the raised capital, hydro power facilities along Laos’ portion of the Mekong River have been drawn, a part of the country’s master plan to become ASEAN’s hydroelectricity hub and a scheme that closely mirrors that of Sarawak, the largest state of Malaysia.

Up to 70 hydroelectric dams along the Mekong River and its tributaries have been planned over the next decade, an increase from the previous but already significant estimate of 55.

At present, Laos has 16 major hydroelectric dams generating 2,560 megawatts of energy and 37 small-scale plants with a total capacity of 6.59 megawatts, according to the Vientiane Times.

 

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