Bangkok Post

CIMBT bullish on secondary market

- SOMRUEDI BANCHONGDU­ANG

CIMB Thai Bank (CIMBT) aims to achieve a 30% growth rate in corporate bond trading in the secondary market next year.

Trading volume in the corporate bond secondary market has been rising and the bank’s market share of transactio­ns has been increasing as well.

CIMBT moved into this segment several years ago and positioned itself as the market leader for secondary bond trade by individual investors, said CIMBT executive vice-president Bhudinan Sethanandh­a.

From January to August this year, the total value of corporate bond trade in the secondary market tallied 14 billion baht. In terms of bond transactio­ns, CIMBT attained a 51% market share or 7.12 billion baht and is aiming to grow this by 30% next year.

In 2020, total corporate bond trading in the secondary market stood at 21 billion baht and CIMBT’s market share was more than 40%.

He said a 51% market share is quite large for a small bank such as CIMBT. The bank plans to maintain its market share at 50% next year, said Mr Bhudinan.

In the future, secondary bond trading is expected to increase and create a larger market with more players. The bank’s market share in the business could decline, but it would be offset by a higher volume, he said.

CIMBT, whose parent is based in Malaysia, started to offer corporate bonds in the secondary market from 2016. The bank has offered corporate bonds in smaller ticket sizes to individual investors. Normally banks offer investment-grade corporate bonds to investors.

“Demand for corporate bonds in the secondary market by individual­s has been rising because both retail investors and depositors want a better return on investment,” Mr Bhudinan said.

As of Sept 1 this year, the coupon rate for five-year corporate bonds with an A credit rating was 2.35% per year, compared with an average one-year fixed deposit interest rate of 0.5%.

The bank forecasts higher corporate bond issuance in the fourth quarter this year because companies are preparing for business expansion and investment. Improving economic activity is supported by lower daily Covid-19 infections and progress in terms of the vaccinatio­n rollout, he said.

With this scenario in mind, CIMBT predicts new corporate bond issuance this year of 800-900 billion baht. New corporate bond offering for the first eight months of 2021 reached 715 billion baht, up from 684 billion for the whole of 2020.

The bank expects higher demand for corporate bonds in the secondary market, said Mr Bhudinan.

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