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Thailand: Finance One from first to last

The deal was so full of firsts that the borrower's name could not have been more appropriate. It was the first time the IFC had set up a US commercial paper programme for a client, the first private Thai company to tap that market and the first time IFC had syndicated a letter of credit. Capping that, the deal was the largest financing it had ever arranged for a financial institution, the World Bank's commercial arm trumpeted in March 1995.

The company? Finance One - one of Thailand's largest finance companies, and now on the brink of collapse with a mountain of non-performing loans to customers hard hit by the country's economic crisis.

The 21 banks which participated in that irrevocable LC to back the pioneering CP programme are ruing the day they ever got seduced into IFC's scheme, which established a $150 million CP programme for Finance One, along with a $30 million six-year loan from IFC direct. The three-year LC was syndicated by IFC and Credit Suisse, while Lehman Brothers arranged the CP programme and is a dealer, along with Citicorp Securities and Merrill Lynch.

The innovative deal doesn't look so attractive now.

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