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The Islamic Bank of Thailand plans to issue Islamic bonds worth Bt50 billion to support Thai Airways International and PTT Exploration and Production (PTTEP), said Dheerasak Suwannayos, its president.

He said the bank would raise funds in Malaysia by issuing Islamic bonds, known as sukuk, worth US$60 million (Bt2.1 billion) in order to test this new market. The bank aims to attract Middle Eastern investors who have not been greatly affected by the global financial crisis, he said.

Then in the early of fourth quarter the

bank will raise another Bt30 billion via

sukuk.

The fund will be lent on to Thai Airways International, he said.

Then at the end of the fourth quarter the bank will issue sukuk worth Bt20 billion to be lent on to PTTEP.

The cost of fund raising is about LIBOR plus 3 per cent.

Dheerasak expects the government will offer tax incentives for issuing sukuk.

He said the bank had planned to launch its first sukuk next month but the Cabinet had not yet approved tax incentives for such bonds.

Meanwhile the Government Savings Bank (GSB) will make new loans to retail borrowers, said Woravit Chailimpamontri, executive director. The GSB will reduce its portfolio, currently worth about Bt200 billion, in order to shift some funds for the loans, he said.

Return on equity and bonds have declined, so the GSB needs to lend more to retail borrowers who can afford interest at 6.25 per cent.

The GSB also wants unemployed people to have access to credit; he added.