Siam Commercial Bank has successfully issued its first US dollar-denominated bonds this year in a test of the interest of foreign investors because Thailand was facing a bearish climate.
Executive chairman Vichit Suraphongchai said yesterday that the notes were issued through the bank’s Cayman Islands branch to save on taxes.
The five-year senior unsecured notes worth US$750 million, with a 3.50-per-cent coupon, were rated "A3" by Moody’s, "BBB+" by S&P and "BBB+" by Fitch.
The sale was 6.4 times oversubscribed with strong support from Asia, Europe and the United States.
The proceeds will be used for the funding requirements of SCB and its foreign branches and for general corporate purposes.
The notes were distributed 68 per cent in Asia, 19 per cent in Europe and 13 per cent in the US. They were distributed to high-quality fixed-income accounts, with 58 per cent going to fund managers, 21 per cent to banks, 17 per cent to insurance and sovereign wealth funds and 4 per cent to private banks.
SCB has set its return-on-equity target at 18-20 per cent this year, down from more than 20 per cent last year, in line with lower income and slower loan growth.
SCB’s loan portfolio will grow in line with the market at 5-6 per cent this year, versus the double digits in many years.
The uncertain future for public spending is a challenge for loan growth at SCB and the banking industry, as lower public spending hurts the business chain.
SCB raised concerns over private investment because of possible problems in the medium term from the delay in public investment, which takes at least three years to show results.