Thailand mulls US$1 billion global sovereign bond offer, first in two decades

THAILAND’S authorities is weighing a plan to boost about US$1 billion from the worldwide market by way of what could be the nation’s first foreign-currency sovereign bond sale in 20 years.

The Finance Ministry goals to wrap up a cost-benefit evaluation and different steps for the providing for the federal government to take a call by May, based on Public Debt Management Office director-general Patchara Anuntasilpa. Such a deal is supposed to offer a benchmark for Thai corporations tapping the abroad markets for his or her funding, he stated.

Authorities in South-east Asia’s second-largest economic system have most well-liked elevating the billions of US {dollars} it requires yearly to bridge a finances hole and fund investments regionally due to low rates of interest. In 2022, the debt workplace shelved a deliberate US greenback bond providing partly attributable to market volatility. But Prime Minister Srettha Thavisin, who took workplace six months in the past, has pitched for abroad bond gross sales to permit world funds to finance sustainable tasks.

“The most likely choice will be US dollar-denominated bonds as it’s a widely used currency and benchmark,” Patchara stated on Wednesday (Feb 14).

Deputy Finance Minister Julapun Amornvivat stated final month that authorities had been rigorously evaluating the sale of notes denominated in US {dollars}, yen or yuan with a goal to problem them over the following one to 2 years. While the borrowing price of dollar-priced bonds can be greater, it could be cheaper or on par with native prices if they’re denominated in yen or yuan, he stated.

10-year US Treasury notes carry a yield of about 4.24 per cent, in contrast with 2.55 per cent for related tenor sovereign baht notes and a pair of.43 per cent on yuan-priced Chinese authorities bonds. The all-in-cost of bond issuance by Thailand in any foreign money together with in yen can be greater than native charges as it’ll embody overseas trade and different charges, Patchara stated.

“It’s very challenging as the funding cost locally is cheaper and more convenient, so we need to convince people why we need to do it the hard way,” Patchara stated. “We should still go ahead with the plan to set a benchmark for the nation.”

The proceeds from any worldwide bond sale will seemingly go to finance sustainability-linked tasks as they add worth to the economic system, Patchara stated. Srettha final 12 months met BlackRock chief govt Larry Fink and urged him to think about investing in sustainable bonds issued by the federal government.

Currently, foreign-currency debt accounts for only one.8 per cent of complete Thai authorities debt and it’s largely within the type of loans from multilateral companies. Thailand’s state borrowing is estimated at 2.4 trillion baht (S$89.5 billion) within the fiscal 12 months that started on Oct 1. BLOOMBERG