Laos bonds expected to bring good returns
The Laotian government’s 3-billion-baht ($96 million) bonds which have been issued in Thailand carry a coupon rate of 4.5 per cent for three-year maturity and 5.1 per cent for five years and are set to bring investors sizeable returns.
The new batch of unrated papers will be offered to only institutional investors and high net-worth clients on November 29, December 2 and December 3. Bangkok Bank and TMB Bank are the arrangers and Twin Pine Consulting the financial adviser, the Bangkok Post reported.
Twin Pine managing director Adisorn Singhsacha said the returns of Laotian unrated bonds have been equal to those of rated bonds with a credit rating of BBB+. Given the success of the Laotian government’s first lot of baht bonds, which were four times oversubscribed in May, he expects the new papers to receive a good response from investors.
Returns will be attractive compared with investment risks, he said. Most bonds will have a three-year lifespan, he said without elaborating on the exact amount.
“We expect the local interest rate will rise in the second half next year on expectations that Thailand’s economy will be driven by government spending,” Adisorn said. He said Laos is a high-growth country that had a growth rate of more than 7 per cent rate per year for 10 years until 2011, while its government aims for 8 per cent growth annually through 2015.
“With the baht bonds, the Laotian government will use the proceeds from non-concessional financing to develop basic infrastructure projects in the country. Bond issuance also provides more flexibility than seeking project finance loans,” Adisorn said.
The Laotian bonds will increase the diversity of the Thai bond market, while they will help set a precedent for countries in the Mekong region ncluding Myanmar and Cambodia to consider raising funds in Thailand as an alternative source of financing rather than relying on conventional sources.
Thailand has potential to become a center to raise cross-border capital following the launch of the Asean Economic Community in late 2015, as it has many advantages over other countries. Adisorn said Twin Pine plans to double the value of its fundraising for foreign investors and governments through the Thai capital market to 9 billion baht next year.
Potential issuers include governments, state enterprises and large companies in neighbouring countries. Foreign issuers have raised 20-30 billion baht a year through the Thai bond market. In comparison, Thai companies mobilise 400-500 billion baht ($13-16 billion) a year.
The Laotian government's 3-billion-baht ($96 million) bonds which have been issued in Thailand carry a coupon rate of 4.5 per cent for three-year maturity and 5.1 per cent for five years and are set to bring investors sizeable returns. The new batch of unrated papers will be offered to only institutional investors and high net-worth clients on November 29, December 2 and December 3. Bangkok Bank and TMB Bank are the arrangers and Twin Pine Consulting the financial adviser, the Bangkok Post reported. Twin Pine managing director Adisorn Singhsacha said the returns of Laotian unrated bonds have been equal to those...
The Laotian government’s 3-billion-baht ($96 million) bonds which have been issued in Thailand carry a coupon rate of 4.5 per cent for three-year maturity and 5.1 per cent for five years and are set to bring investors sizeable returns.
The new batch of unrated papers will be offered to only institutional investors and high net-worth clients on November 29, December 2 and December 3. Bangkok Bank and TMB Bank are the arrangers and Twin Pine Consulting the financial adviser, the Bangkok Post reported.
Twin Pine managing director Adisorn Singhsacha said the returns of Laotian unrated bonds have been equal to those of rated bonds with a credit rating of BBB+. Given the success of the Laotian government’s first lot of baht bonds, which were four times oversubscribed in May, he expects the new papers to receive a good response from investors.
Returns will be attractive compared with investment risks, he said. Most bonds will have a three-year lifespan, he said without elaborating on the exact amount.
“We expect the local interest rate will rise in the second half next year on expectations that Thailand’s economy will be driven by government spending,” Adisorn said. He said Laos is a high-growth country that had a growth rate of more than 7 per cent rate per year for 10 years until 2011, while its government aims for 8 per cent growth annually through 2015.
“With the baht bonds, the Laotian government will use the proceeds from non-concessional financing to develop basic infrastructure projects in the country. Bond issuance also provides more flexibility than seeking project finance loans,” Adisorn said.
The Laotian bonds will increase the diversity of the Thai bond market, while they will help set a precedent for countries in the Mekong region ncluding Myanmar and Cambodia to consider raising funds in Thailand as an alternative source of financing rather than relying on conventional sources.
Thailand has potential to become a center to raise cross-border capital following the launch of the Asean Economic Community in late 2015, as it has many advantages over other countries. Adisorn said Twin Pine plans to double the value of its fundraising for foreign investors and governments through the Thai capital market to 9 billion baht next year.
Potential issuers include governments, state enterprises and large companies in neighbouring countries. Foreign issuers have raised 20-30 billion baht a year through the Thai bond market. In comparison, Thai companies mobilise 400-500 billion baht ($13-16 billion) a year.
