FIDF plans to issue Bt40-bn bonds

The FIDF would have to discuss with the Public Debt Management Office (PDMO) about the bond type and timing, Povongtip Poramapojn, senior director of the Bank of Thailand's Fund Operation Department, said yesterday.

The FIDF could either sell savings bonds to the public or bonds to institutional investors, depending on the government's schedule for issuing Bt800 billion bonds to finance its investment projects and revenue shortfall.

The bonds would be for three or four years so that they would be retired before 2013 when the FIDF is scheduled to shut down. However, they should not expire in 2011 because more than Bt30 billion of FIDF bonds mature that year.

"We have to set the schedule of the government bonds as the first priority. We anticipate finalising the plan in August so that we have time to prepare," she said.

The FIDF does not have enough cash to pay back the bondholders because it has not completed a plan to sell off the stocks and land in its asset portfolio.

The FIDF could sell the new bonds to the central bank if PDMO's schedule to issue the government bonds is so tight that there is no room for the FIDF bonds.

"We want to sell to the market but we have to find out the way if the Finance Ministry issues a large amount of the bonds," she said.

A large supply entering the market could unnecessarily spur bond yields, she said.

The FIDF had earlier placed Bt48 billion bonds with the central bank to avoid upsetting the bond market.

The new bonds would not be made available to foreign investors due to foreignexchange risk while the FIDF does not have foreign income.

Thongurai Limpitit, the FIDF's fund manager, said the asset management plan has been completed on how to clear out the shares and landholdings in the investment portfolio. It would be considered by the FIDF's board before forwarding to the ministry.

The plan includes four methods to dispose of the stake in Siam City Bank, with mergers and acquisitions as the option preferred by the ministry, according to the ministry.