Who says foreign investors are fleeing Thailand because of political instability and the controversial 30-per-cent reserve requirement for capital inflows?

After years of waiting, regional investment banks responded overwhelmingly to the Government Housing Bank (GHB) mortgage-backed securitisation request for proposal issued on March 1.

Last week the international and local investment community showed immense interest in the securitisation. More than 50 investment bankers representing 24 local and foreign financial institutions attended a question-and-answer session at GHB headquarters.

All signed confidentiality agreements and brought many top securitisation experts with them.

GHB president Khan Prachuabmoh said many local and overseas investment banks had asked for copies of the request for proposal and additional information.

"We are very happy with the investment-banking industry's response," he said.

Sources indicate global securitisation financial institutions such as Citigroup, hsbc, JP Morgan, UBS, Standard Chartered, Calyon, Deutsche Bank, Barclays, ABN Amro and Nomura all had key representatives in attendance.

Local banks such as Bangkok Bank, Bank of Ayudhya, Siam Commercial Bank, the Government Savings Bank and Trinity sent representatives.

The request for proposal asked investment banks to develop and implement GHB's plan to securitise part of its current home-loan portfolio.

"GHB's successful securitisation of part of its mortgage portfolio is important for the bank's future growth and more importantly is a milestone for Thailand's access to the global capital markets," Khan said.

Market sources tell The Nation that GHB is initially looking at securitisation of at least US$1 billion (Bt35.2 billion) of its current mortgage portfolio of more than Bt500 billion. Part of the securitisation will be done overseas and part locally.

By securitising part of its mortgage portfolio and selling it as high-grade securities on the local and international markets, GHB will be accessing new sources of funding for its operations and for home-loan borrowers.

GHB is 100-per-cent owned by the Ministry of Finance and funds its operations through deposits and by domestic and overseas lending guaranteed by the ministry.

Accessing local and global bond markets through the securitisation of parts of its mortgage portfolio will, in most cases, allow GHB to raise additional funds for home-mortgage funding without needing government guarantees.

GHB chief financial officer Kanit Sukonthaman chaired the question-and-answer session. He told bankers the proposed undertaking would be the bank and Thailand's first real-estate mortgage-backed securitisation.

"This securitisation is very important for the country and I wish you all success," he said.

GHB officials asked the prospective bidders to consider developing long-term securitisation programmes that would benefit GHB and home-buyers.

"We expect that securitisation will be an important and significant funding alternative for GHB and the country in the future," Kanit said.

Global and local investment banks are attracted by GHB's proposed initial securitisation because bank officials indicated they planned to implement annual securitisation programmes as an integral part of its long-term funding initiatives.

In addition, bonds backed by GHB-issued real-estate mortgages - primarily to middle- and lower-income individuals - are expected to be of the highest quality issued by the Thai market.

The GHB portfolio includes more than one million home loans averaging Bt685,000.

By their initial response, investment bankers are showing investors are still bullish on Thailand.

KI Woo

The Nation