TMB Bank is focusing more on underwriting issues of baht-denominated bonds for foreign sovereigns and corporates as it foresees potential for the Thai market to be the centre of fund mobilisation for the CMLV countries (Cambodia, Myanmar, Laos and Vietnam
The bank recently acted as the lead arranger of the issue of Bt1.5 billion worth of three-year baht-denominated bonds for the Laotian Ministry of Finance. The bonds offered a coupon of 4.50 per cent per annum to institutional and high-net-worth investors.
Piti Tantakasem, chief wholesale banking officer at TMB, said the transaction reflected the Thai market’s role in facilitating fund-raising for foreign sovereigns, adding that CLMV countries were familiar with the baht, and were aware that Thailand had stepped forward in the bond market.
During the past 10 years, the bond market in Thailand has increased to Bt8.6 trillion from Bt2.5 trillion, a growth level not far from that of the stock market’s value, which increased to Bt11 trillion from Bt4.7 trillion in the same period.
He said Thai laws at present paved the way for foreigners to issue baht-denominated bonds.
“We saw a trend of baht-denominated bonds [issued] by foreign sovereigns and corporates for a while and we believe we can help respond to the requirement of corporate and state agencies in CMLV as those countries demand massive funds to develop their economies,” he said.
The Thai capital market has advanced more than in neighbouring countries, who also want to learn how to raise funds beyond the financial market, he added.
TMB was able to underwrite the baht-denominated bonds of the Laos government because this issuer had received an exemption from the Thai Finance Ministry’s requirement for an international credit rating.
Piti said the bank planned to ask for similar exemptions by the Finance Ministry and the Securities and Exchange Commission for additional foreign bond issues worth a total of Bt20 billion to Bt30 billion.
In addition, in the home market, Piti said fund mobilisation through the capital and debt markets was more active than last year. In the telecommunication and media sectors, companies need funds to establish third-generation wireless broadband and digital television. Construction companies and their subcontractors are expected to use these instruments as well, as they participate in the government’s infrastructure mega-projects.
TMB’s fee income from investment banking in the first four to five months grew by 20 per cent, exceeding the growth seen in all of 2012. The growth is mainly from trade finance, especially in the import sector thanks to the baht’s appreciation.