At a two-day conference attended by more than 550 industry professionals from around the region, many experts said Thailand had finally "gotten its act together" and should be fertile ground for future securitisations.

Soramon Inkantanuvatana, a Citigroup vice president of Globalised Securitised Markets, and Ada Ingawanij, head of fixed income capital markets for ABN AMRO Bank, both said the Thai securitisation market was expected to grow substantially this year.

"Securitisation is the answer to creating liquidity out of Thailand's current illiquid credit market," Ada said.

Thailand's banks and financial institutions are not flush with liquidity.

"In countries such as Hong Kong and Singapore, the bank's deposit-to-loan ratio is about 2:1," said Leland Sun, president of Hong Kong-based Pan Asian Mortgage Ltd.

Consequently companies in those jurisdictions can in most cases obtain more economical funding through bank loans and the bond market. In Thailand the average deposit-to-loan ratio is closer to 1:1. Securitisation can therefore be a very competitive way to raise funds.

Thailand has been slower in issuing asset-backed securities than Korea, Taiwan and Malaysia, partly because it has been slower in implementing the necessary tax and legal infrastructure to support a viable securitisation industry.

Although Thai companies began issuing asset-backed securities for automobile loans in about 1996, the market ground to a virtual halt during the financial crisis and did not begin picking up until about 2003. Currently most securities in Thailand are backed by car loans and credit-card receivables.

Kanit Sangsubhan, director of Thailand's Fiscal Policy Research Institute, said that laws and regulations supporting the securitisation industry's growth had now been enacted or were about to be.

"The Thai government's policy is to ensure that securitisation is developed as quickly as possible, because it is seen as a critical element in funding national economic development. I believe that all necessary tax and legal infrastructures are now ready," he said.

Several people at the conference said they were excited about the prospect of the Government Housing Bank (GHB) issuing the country's first mortgage-backed security, either at the end of 2006 or in early 2007.

"We intend to securitise about US$1 billion [Bt38.5 billion] of our home mortgages," said Khan Prachuabmoh, GHB's president.

Khan added that his bank intended to follow this up with subsequent annual issues of similar amounts.

 "Securitisation will allow GHB to continue funding the growth of housing for middle-income and lower-income Thai citizens," he said.

The proposed GHB securitisation will be Thailand's first real-estate mortgage-backed security.

"Because of its size and its asset quality, the GHB securitisation will serve as a benchmark for future Thai securitisations," ABN's Ada said.

nThis is the first in a series of articles on the development of the securitisation market in Thailand.

KI Woo

The Nation

HONG KONG