KTB plans further issues of US$ bonds
Krungthai Bank plans to issue more bonds in US dollars after the first tranche of US$500 million (Bt14.9 billion) in unsecured notes was oversubscribed by foreign investors.
KTB is the first local bank to raise funds in US dollars this year, after issues of dollar bonds by three major Thai banks last year.
Kittiya Todhanakasem, first senior executive vice president of KTB, said that after succeeding in boosting the bank's Tier 1 capital, the management decided to raise US dollar funds in the first half of this year to ensure sufficient liquidity.
The bank recently issued $500 million in dollar-denominated senior unsecured notes to foreign investors with a maturity period of five and a half years. The bonds met with overwhelming response and investors wanted to know when the bank would again issue dollar bonds.
Funds raised from the $500-million bond issue will be used in lending expansion, she said, adding that dollar-lending growth was expected to rise in line with the bank's overall loan-growth projection of 7 per cent.
Several brokerage houses are bullish on KTB on the expectations that the bank will benefit from the government's Bt2-trillion infrastructure projects and the urbanisation of major provinces. KTB has the largest branch network upcountry.
Analysts believe KTB's loan growth could reach 12 per cent this year.
Kittiya agreed that the bank's total lending in 2013 could rise by 10-12 per cent.
Demand for US dollars among the bank's clients mainly comes from Thai conglomerates using the US currency for merger-and-acquisition (M&A) activities outside the ASEAN region, she said.
In general, KTB mobilises US dollar funds from foreign-currency deposits (FCDs), foreign-exchange swaps, and interbank dollar lending.
Kittiya said issuing US dollar bonds was the best choice at the moment given lower costs from the strong baht and the resolution of United States' fiscal situation.
She said fund mobilisation from FCDs amounted to just tens of billions of baht as depositors preferred baht terms. However, the bank hopes FCDs will gradually increase amid the Bank of Thailand's push for foreign investment by individuals.