Large banks embrace debt fund-raising
Large banks have raised local and foreign currency debentures to lock in cheap costs and increase liquidity in anticipation of higher loan demand, which they expect to be driven by Thailand’s positive economic momentum.
Kasikornbank (KBank) offered dollardenominated senior 5½-year unsecured notes worth US$400 million (12.8 billion baht) last week through its Hong Kong branch.
The notes received a BBB+ credit rating from Fitch Ratings and Baa1 rating from Moody’s Investors Service, and will be listed on the Singapore Stock Exchange.
The notes were issued under KBank’s $2.5-billion medium-term note programme, which was rated
BBB+ on May 9, 2017.
KBank president Predee Daochai said the bank prepared a dollar-denominated reserve to respond to customer demand for foreign currency loans, which will be used, among other things, for trade finance, in line with the country’s strong export growth and robust economic outlook.
The Bank of Thailand expects the country’s GDP to grow by 3.9% in 2018, with merchandise shipments rising 4%.
Mr Predee said higher dollar-loan demand is being driven by the bank’s foreign networks. Financial cost management is another key factor prompting the bank to offer dollar debentures in a risingyield environment.
The market expects the US Federal Reserve to increase its policy rate twice this year, which should prompt a hike in the money market rate.
Last year, Siam Commercial Bank allocated $900 million in debentures, $400 million of which was for senior unsecured notes with a maturity of five years issued in January. The remaining $500 million have the same lifespan but were offered in November.
The first batch of the bank’s debentures carried a coupon rate of 3.2%, while the second lot had a rate of 2.75%.
Bank of Ayudhya offered 15 billion baht in senior unsecured bonds with a maturity of up to three years under its bond issuance programme.
Fitch Ratings Thailand assigned a AAA rating to the baht-bond allocation, and the proceeds of the issue will be used for refinancing or general corporate purposes.
Krungthai Bank (KTB) also issued baht-denominated Basel III-compliant Tier 2 subordinated unsecured debentures in November with a coupon rate of 3.40%.
The debentures, which have a maturity of 10 years and come with an option to redeem after five years, were rated AA+ by Fitch Ratings Thailand.
KTB plans to use the proceeds from the issuance to manage its own liquidity as well as general corporate purposes.