Debt servicing costs to rise if credit rating cut, BOT warns
The central bank accepts that if Thailand’s credit rating is cut, it will drive up the country’s debt-servicing costs.
Bank of Thailand spokeswoman Dr Roong Poshyananda Mallikamas said the interest rate on credit default swaps of Thai government bonds had increased from 1.1 per cent to 1.3 per cent by the end of last year, higher than Philippine bonds, even though that country’s credit rating is lower than Thailand’s. The rate for Malaysia was 1 per cent.
Meanwhile, CIMB Thai’s vice president for economic and financial market research, Dr Amonthep Chawla, said that if Thailand does not have a new government by the third quarter, credit agencies might cut the country’s rating. It is already clear that the political problem will have an impact on this year’s economic growth.
Tax collection down 4.2%
Tax collection in the first five months of fiscal year 2014 (October 2013 to February 2014) totalled Bt785.48 billion, down by 4.2 per cent or Bt34.36 billion from the same period last fiscal, said Somchai Sujjaponse director-general of the Finance Ministry’s Fiscal Policy Office.
The auction of the 2.1-gigahertz telecom spectrum for third-generation cellular service brought in Bt20.84 billion for the state.
Disbursement of the fiscal budget amounted to Bt1.22 trillion, up by 6.3 per cent or Bt72.54 billion over the same period of last year, resulting in a budget deficit of Bt433.17 billion. The government incurred a total deficit of Bt487.66 billion when non-budgeted deficits are included. It relied on loans to compensate for the Bt120.31-billion deficit resulting from a combined cash deficit of Bt367.35 billion, leaving a fiscal balance of Bt236.57 billion as of February 2014.
In the first five months of fiscal year 2014, the fiscal balance was still at a strong level, with disbursements slightly exceeding targets. Hence the state sector is still a vital engine of the Thai economy, Somchai said.
Sriracha Construction shares sold
Some of the major shareholders and founders of Sriracha Construction sold a total of 31.50 million existing common shares through an overnight global book-build transaction to both local and international investors at Bt35 per share.
The transaction is equivalent to 10.29 per cent of total paid-up capital. After the transaction, the founders continue to hold a controlling stake in Sriracha Construction of 63.55 per cent (both direct and indirect), reduced from 73.83 per cent before the transaction.
The offering was placed jointly by Phatra Securities and Bank of America Merrill Lynch. It was reportedly well received by both local and foreign investors. With support from domestic institutions, the transaction was upsized from a base deal of 21.50 million shares to 31.50 million shares, equivalent to a total transaction value of Bt1.10 billion (US$33.84 million).
International reserves drop
The country’s international reserves as of March 21 were worth Bt5.43 billion or US$167.7 billion, down 0.28 per cent and 0.53 per cent respectively from March 14, the Bank of Thailand reports.
The international reserves include gold, foreign currency, special drawing rights, and reserve positions in the International Monetary Fund.
Meanwhile, net forward position as of March 21 was $23.4 billion, down 0.4 per cent from $23.5 billion on March 14. This is defined as the central bank’s forward obligations to buy or sell foreign currency against the baht.