The bonds, which have a three-year maturity, will be on sale from August 15 to 24 to retail investors, Pannee Stavarodom, director of the Public Debt Management Office said yesterday.

She said the coupon rate will be equal to the rate of a three-year government bond plus a spread of not more than 15 per cent of the returns. The exact rate will be announced two days ahead of the selling date.

The bonds will be available from Kasikornbank branches nationwide.

The ministry will issue another batch worth Bt500 million between September 15 and 26 and plans to issue further bonds worth about Bt6 billion in the next fiscal year, starting from October 2006 and at a rate of about Bt500 million per month.

The ministry began its monthly saving bond issuance last August. Maturity of the previous bonds was between five and seven years. As of last month, the total value of bonds issued was Bt24.39 billion, lower than the original target of Bt30 billion.

As banks competed for deposits by offering higher deposit rates earlier this year the popularity of the savings bonds declined, Pannee said. However, she said she was confidant that the bonds with a three-year maturity will prove attractive.

If the new government decides to have a fiscal deficit next year, the ministry may increase the number of saving bonds, she said.

Saving bonds are part of the government's attempt to provide alternative investment tools for retail investors. Each investor has the right to buy between Bt10,000 and Bt500,000 each month.

It is also part of the government's debt-management scheme to repay debts incurred by the Financial Institutions Development Fund, an arm of the central bank, which suffered losses of Bt1.4 trillion in its failed attempt to rescue the banking sector during the 1997 financial crisis. It will take an estimated 19 years to repay the debt.

Wichit Chaitrong

The Nation