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| Kingdom of Thailand | |
| Value | Bt40 billion inflation-linked 10-year bonds |
| Sole Bookrunner | HSBC |
| return to the Asian Deals of the Year index | |
Indonesia wasn’t the only sovereign to impress in 2011. Euromoney has long argued the importance of deep, liquid, sophisticated local-currency bond markets in Asia, and the transaction that most clearly spelled out how much improvement has taken place came from Thailand, with a Bt40 billion ($1.26 billion) inflation-linked bond that priced in July.
It is not as if it was the easiest year for Thailand. It entered 2011 in continuing political turmoil, then had a general election with unexpected results, and was then blighted by the worst floods in its modern history. But the bond demonstrated how Thailand’s markets – stock and bond, domestic and, in terms of foreign participation in the country, international – have remained remarkably resilient no matter what happens there. Having set about a domestic education programme in May and launched domestic and international roadshows in June, the deal finally launched the week after the election.
It flew out the door, gaining Bt65 billion of orders from 65 accounts in 11 countries – quite something for a Thai baht deal. The planned Bt20 billion deal was doubled in size and still had room to spare. The real yield was just 1.2%, providing excellent funding to the state, while the 37.5% allocation to international investors provided a good mix of foreign enthusiasm and important local engagement.
More than that, it made Thailand the first country in south east Asia to issue inflation-linked bonds. At that point of the year, inflation was still considered the biggest single threat that Asian central bankers had to deal with, and although problems in Europe have turned attention away from inflation and back to growth, this structure is likely to prove important. (The Philippines is believed to have a similar deal in the works already).
It diversified Thailand’s investor base, extended its duration to 10 years – a useful contribution to Thai bond market development too – and brought the country to global investor attention without having to take on a currency risk. The deal, says Chakkrit Parapuntakul, director general of the ministry of finance’s public debt management office, “raised the bar of the domestic bond market to the international level”.
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Asia |
| Sun Art Retail Group |
| Kingdom of Thailand |
| ICBC (Asia) |
| BP/Reliance |
| Vedanta Resources |
| Republic of Indonesia |
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