2012_Lunch Talk Bond Market Development Bureau

May 2012

Linking CGIF & BAHT BOND to the Development of Bond Market A. Credit Guarantee and Investment Facility (CGIF) B. Baht – Denominated Bond in Thailand (Baht Bond)

Public Debt Restructuring and Domestic Bond Market Development Fund (PDDF) : An Overview A. PDDF Vision and Objective B. Organization Chart C. PDMO & PDDF Workflow D. PDDF Milestone and Investment Performance E. Looking Forward

Domestic Bond Market Development A. Evolution of Bond Market Development (1995 – Present) B. Building up of Benchmark Bond (FY2007 - FY2012) C. Bond Supply FY2012 + Funding Needs FY2012 - FY2015 D. Well-Developed Bond Market Improved Government Debt Profile Dramatically

For Lunch Talk 2012

Bond Market Development Bureau Public Debt Management Office Ministry of Finance

01

3 May 2012

Linking CGIF & BAHT BOND to the Development of Bond Market A. Credit Guarantee and Investment Facility (CGIF) • Objectives / Benefits • Functions • Why now? What’s next?

B. Baht – Denominated Bond in Thailand (Baht Bond) • Objectives / Benefits / Trade – off • Baht Bond Application Process • The Progress of Baht Bond Issuance and Rate of Approval

Linking CGIF & BAHT BOND to the Development of Bond Market Bond Market Development Bureau, Public Debt Management Office

Total Outstanding 7,710 BB

CGIF

BAHT BOND

as of 31 Mar 12

4 BB

70 BB

CGIF Baht Bond

1%

Corp Bond

19%

SOE Bond

6%

2012 2013 2014 2015 2016 2017 2018 2019

?

IBRD

Natural hedging

2005 2006 2007 2008 2009 2010 2011 2012

Inv’t Grade

Hana (18,000 m) CBA

DB

KEXIM SEK

BOT Bond

38%

Targeted industry

(17,200 m)

Woori

IBK

CABEI

(12,300 m) AFD

Citi

KDB

(11,553 m)

ING (10,000 m)

Why now?

Thailand (PDMO) is a Board member  Set criteria  Select corporate

Presented by: Veeraya Julamont Laksika Tengpratip

GOVERNMENT Bond

(PDDF.)

36%

ADB (10,500 m)

Why now?  Toward becoming regional hub  Broadening investors’ base  Increasing product choices

International Bond Market Policy Division Bond Market Development Bureau Public Debt Management Office 02

Linking CGIF & BAHT BOND to the Development of Bond Market Bond Market Development Bureau, Public Debt Management Office

CGIF

Total Outstanding 7,710 BB

BAHT BOND

as of 31 Mar 12

4 BB

70 BB

CGIF Baht Bond

1%

Corp Bond

19%

SOE Bond

6%

2012 2013 2014 2015 2016 2017 2018 2019

2005 2006 2007 2008 2009 2010 2011 2012 IBRD

Natural hedging

Hana

?

Inv’t Grade

(18,000 m) CBA

DB

KEXIM SEK

BOT Bond

38%

(17,200 m)

Woori

IBK

CABEI

Targeted industry

(12,300 m) AFD

Citi

KDB

(11,553 m)

ING (10,000 m)

Why now?

Thailand (PDMO) is a Board member  Set criteria  Select corporate

03

GOVERNMENT Bond

(PDDF.)

36%

ADB (10,500 m)

Why now?  Toward becoming regional hub  Broadening investors’ base  Increasing product choices

What is Asian Bond Market Initiative (ABMI) : How it relates to CGIF? Bond Market Development Bureau, Public Debt Management Office

Q2-09 : ASEAN + 3 discussion to establish

Task Force I Thailand China Task Force II Singapore Japan

Task ForceIII Malaysia Japan

Task ForceIV Philippines South Korea

SUPPLY DEMAND

CGIF to facilitate corporate local currency bond issuance within the region Q4-10 : CGIF Establishment Q3-12 : Fully operate Q4-04 : Establish Asian Bonds Online Website Q4-11 : Asian Bond Markets Summit

Q4-04 : Establish ASEAN Bond Market Forum

REGULATION

INFRASTRUCTURE

Q4-11 : Idea to establish Regional Bond Association

Q2-11 : Working Group hired Clearstream to conduct a study of regional linkage on regional Clearing & Settlement System

04

CGIF : Objectives Benefits Bond Market Development Bureau, Public Debt Management Office

Benefits

Objectives 1) To develop deep and liquid local currency and regional bond markets

2) To enable investment-grade ASEAN+3 issuers to access local currency bond markets and to promote the issuance of debt securities with longer term maturities to match the gestation of investment projects



An issuer’s cost saving



An efficient fund raising and a conformity with financial requirement of the business



A reduction of currency & Maturity Mismatch

Functions of CGIF Bond Market Development Bureau, Public Debt Management Office

05

1)

Guaranteeing bonds that are denominated in local currencies and issued by ASEAN+3 entities rated investment-grade

2)

Guaranteeing bonds that are not denominated in local currencies and issued by ASEAN+3 entities rated investment-grade, provided the entities concerned are naturally hedged in such currency

3)

Making investments for the development of the bond markets (no such investments shall be made until after the Meeting of Contributors has determined that CGIF is in a position to commence such operations); and

4)

Undertaking such other activities and providing such other services consistent with CGIF objectives

Prudential Limits Bond Market Development Bureau, Public Debt Management Office

Country Exposure Limit :

Within 20 of its capital

140m

Currency Exposure Limit :

Within 40 of its capital

280m

Sector Exposure Limit * :

Within

30 of country exposure

1. Agriculture and primary products

8. High tech

2. Aerospace/automobile/capital goods/metal

9. Insurance

3. Consumer/service sector

10. Leisure time/media

4. Energy and natural resources

11. Real Estate

5. Financial Institutions

12. Telecommunications

6. Forest and building products/homebuilders

13. Transportation

7. Healthcare/chemicals

14. Utility

42m

* To be effected when CGIF’s initial capital is increased or the maximum leverage ratio is raised by the Meeting of Contributors as per OP 208 and 209 • Potential Target Market • Expected Cost Reduction

Current Corporate Bond Market

Bond Market Development Bureau, Public Debt Management Office

By Business Sector

By Rating

Thai Corporate Bond (Issued during Jan 2011 – Mar 2012)

393,221.70 THB mln.

Others Trans

Agri Fin

6%

Bank

5% 5%



25%

6%



Food 8%



Energy Prop 13%



19%

AAA BBB 12% 6%

Target Industry rating ≥ BBB

AA

Cost Saving Currency Matching

34%

A

48%

ConMat 13%

bps

400

Average : 220.13 bps (From 2008 – Current) Average : 55.38 bps (From 2008 – Current)

Max : 347.71 bps

300

Max : 123.08 bps

BBB

Note: Excluding corporate bond with less than 1-yr issue term

3/30/2012

2/29/2012

1/31/2012

8/31/2011

7/29/2011

6/30/2011

5/31/2011

4/29/2011

Now : 156.74 bps

3/31/2011

2/28/2011

12/30/2010

11/30/2010

9/30/2010

10/29/2010

8/31/2010

7/30/2010

6/30/2010

5/31/2010

4/30/2010

3/31/2010

2/26/2010

1/29/2010

12/30/2009

11/30/2009

9/30/2009

10/31/2009

8/31/2009

7/31/2009

6/30/2009

5/29/2009

4/30/2009

3/31/2009

2/27/2009

1/30/2009

12/30/2008

11/28/2008

9/30/2008

10/31/2008

8/29/2008

AAA

12/30/2011

0

Now : 105.82 bps

A

Min : 97.95 bps

11/30/2011

100

9/30/2011

Min : 12.27 bps

10/31/2011

200

1/31/2011

500

(As of 31 March 2012) Source: Thai BMA

06

Establishment of CGIF : Contributors and Board of Directors Bond Market Development Bureau, Public Debt Management Office

Fund Contribution (Million USD)

Thailand

70

1

200

2

200

2

100

1

130

1

700

7 (+1 CEO)

ASEAN 10

ADB Trustee

Board of Directors (3-year term) (2010-2013)

Rotation of ASEAN 10 : 1. Thailand Indonesia Malaysia Philippines and Singapore 3-year term 2. Brunei Cambodia Laos Myanmar and Vietnam 3-year term

ASEAN by PDMO (Thailand) sits on 3 of board seats

Organizational Structure

Bond Market Development Bureau, Public Debt Management Office

BOARD OF DIRECTORS 1

2

3

4

5

6

7

8

CEO

(INTERNAL CONTROL AND RISK MANAGEMENT COMMITTEE : ICRMC)

(AUDIT COMMITTEE: AC)

Chairman CHIEF RISK OFFICER (CRO)

(GUARANTEE AND INVESTMENT COMMITTEE)

07

PROJECT

(NOMINATIONAND REMUNERATION COMMITTEE: NRC)

CGIF : Why NOW? What’s NEXT? Bond Market Development Bureau, Public Debt Management Office

Why NOW? BOARD OF DIRECTORS ICRMC

AUDIT COMMITTEE

NRC

CHIEF RISK OFFICER (CRO)

GUARANTEE AND INVESTMENT COMMITTEE)

Pilot Project

What’s NEXT? 1-on-1 with PDMO/Arranger (+ CGIF consultant) Nov

Announcing of CGIF Establishment

2010

Dec 11 –Feb12

July

CEO Selection

Drafting of Business Plan

2011

Market Research & Legal Survey (in targeted markets)

Market Dialogue (+ CGIF CEO)

5-6 project proposals from arrangers

May-Jun 12

Approval of Business Plan by BOD Pre-Marketing

July 12

Pilot Project

Expectation of 1st Deal

Selection process

2012

08

Linking CGIF & BAHT BOND to the Development of Bond Market Bond Market Development Bureau, Public Debt Management Office

CGIF

Total Outstanding 7,710 BB

BAHT BOND

as of 31 Mar 12

4 BB

70 BB

CGIF Baht Bond

1%

Corp Bond

19%

SOE Bond

6%

2012 2013 2014 2015 2016 2017 2018 2019

2005 2006 2007 2008 2009 2010 2011 2012 IBRD

Hana

Natural hedging

?

Inv’t Grade

(18,000 m) CBA

DB

KEXIM

SEK

BOT Bond

38%

(17,200 m)

Woori

IBK

CABEI

Targeted industry

(12,300 m) AFD

Citi

KDB

(11,553 m)

ING (10,000 m)

Why now?

Thailand (PDMO) is a Board member  Set criteria  Select corporate

09

GOVERNMENT Bond

(PDDF.)

36%

ADB (10,500 m)

Why now?  Toward becoming regional hub  Broadening investors’ base  Increasing product choices

Baht – Denominated Bond in Thailand (Baht Bond) Bond Market Development Bureau, Public Debt Management Office

OBJECTIVES

BENEFITS INVESTORS

• To develop domestic bond market by increasing the proportion of foreign issuers and variety of products.

• To provide the opportunity for domestic investors to invest in a good quality bond

• To diversify source of investment • To reduce FX risk from the investment in foreign bonds

TRADE - OFF

ISSUERS

• To diversify the portfolio • To reduce the FX risk in THB currency (for foreign investors who would like to raise fund for investment in Thailand)

More variety of domestic bonds

Effect to Thai Corporate Issuers

Bond Market Development

10

Eligible Applicants for Baht Bond Bond Market Development Bureau, Public Debt Management Office

INTERNATIONAL FINANCIAL INSTITUTIONS (IFIs)

FOREIGN GOVERNMENTS (FGs)

such as ADB, WB, IFC and IMF

JURIDICAL ENTITIES

FINANCIAL INSTITUTION OF FGs

that have been established under foreign laws

(FIFGs) SPECIAL PURPOSE VEHICLE (SPV)*

* Remark: Special Purpose Vehicle (SPV) is established for the purpose of the securitization in which the originator is foreign government agency or organization and/or foreign juridical person.

Timeline for Baht Bond Application Process Bond Market Development Bureau, Public Debt Management Office

Nov

Dec

SUBMISSION

CONSIDERATION

Jan

Feb

1

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Issuance Period 9 months (Jan - Sep)

SUBMISSION

CONSIDERATION

2

Issuance Period 9 months (May - Jan)

SUBMISSION

CONSIDERATION

3

Issuance Period 9 months (Sep - May)

SUBMISSION

CONSIDERATION

1

Issuance Period 9 months (Jan - Sep)

APPLICATION PROCESS: 3 rounds per year (9-mth issuance period for each round)

* The approval period is based on the fiscal period under Thai government law (October – September)

11

The Progress of Baht Bond Issuance and Rate of Approval

Already reached the target of 15,000 THB mln. (as the minimum) within the first 3 months of year 2012 Bond Market Development Bureau, Public Debt Management Office

* Included clients in all credit rating levels

THB mln.

180,000 Lehman Crisis

150,000

120,000

167,000

90,000

101,400 84,000

60,000

58,300 49,400

32%

23

30,000 (2 issuers)

% (3 issuers)

38

7,000

2005

2006

(7 issuers)

(5 issuers)

26

% (2 issuers)

32,000

(2 issuers)

13,500

66,000

19%

33%

% (3 issuers)

(7 issuers)

11%

22,000 0

18%

5,374

18,088

12,000

2008

2009

2007

27,300

31,950

2010

2011

17,300 2012 (Q1)

Remark: The classification is based on the approval period

As of May 1, 2012

• International Credit Rating has “negative relationship” with Baht Bond issuance • Korean issuers are the majority of Baht Bond issuance (by amount)

Baht Bond Issuance By Rating

Bond Market Development Bureau, Public Debt Management Office

The Percentage of Baht Bond Issuance (By International Rating) 100%

% of the authorized amount

100% 100%

62% 50%

53% 46%

48%

47% 44%

43% 36%

33%

31%

29%

29%

25% 19% 0%

3%

7%

21%

11%

AAA

Woori

Hana

CABEI

Citi

KEXIM

KDB

IBK

ENBD

Cargil

ING

DB

CA-CIB

CBA

SEK

KfW

KBN

JBIC

AFD

ADB

IBRD

IFC

0%

A(International Rating)

Remarks: 44% of the total issued amount is issued by Korean issuers.

As of April 4, 2012

12

• To Enhance Our Cooperation • To Achieve Our Missions

Development Direction of Baht Bond

Bond Market Development Bureau, Public Debt Management Office

To Enhance our cooperation : 2012

Arranger BOT Deregulation of Swap Obligation

• Facilitating issuers & investors in Baht Bond • Providing market updates in one-on-one meetings

Extension of Approval Period

To Achieve our missions : 2015 Issued amount (per year)

2004 - 2011 between 5,000

Number of issuers (per year)

– 27,000 MB

between 2

Outstanding size

– 6 clients

2012 - 2015

minimum

15,000 MB

minimum

4 clients

3%

1%

(% share of BOND market capitalization)

Co-operation within PDMO Bond Market Development Bureau, Public Debt Management Office

Debt Management 2 Bureau

Bond Market Development Bureau

Policy and Planning Bureau

Law

1 Government Bond Market Development Division

2

3

Fund Management and Bond Market Infrastructure Development Division

International Bond Market Policy Division

Baht Bond • SOEs (THAI,BAAC, EGAT, PEA)

13

CGIF

• Credit Rating • IFIs (ADB, World Bank)

• Legal Advisor

• Legal Advisor

16 May 2012

Public Debt Restructuring and Domestic Bond Market Development Fund (PDDF) : An Overview A. PDDF Vision and Objective B. Organization Chart C. PDMO & PDDF Workflow D. PDDF Milestone and Investment Performance • 1st period LB11NA ( 31th Oct – 29th Nov 2011) • 2nd period SB129A ( 4th Nov 2011 – 31th Aug 2012) E. Looking Forward Fund Management and Bond Market Infrastructure Development Linking CGIF & BAHT BOND to the Development ofDivision Bond Market Total Outstanding 7,710 BB

Bond Market Development Bureau, Public Debt Management Office

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

CGIF

as of 31 Mar 12 7,710 BB Total Outstanding

BAHT BOND

as of 31 Mar 12

4 BB

70 BB

CGIF

PDDF . 2015 2016 2017 2018 2019 2012 2013 2014 .

Baht Bond

1%

Corp Bond

19%

SOE Bond

6%

.

MOF Outright PD as a 2007 2008 2009 2010 2011 2012 2005 2006 Market Maker and Contributor EBI ING (10,000m)

Cargill

Inv’t Natural Grade Active Debt Management hedging

CBA

?

And Bond Market Development

MOF Outright PD

CITI (9,100m)

SEK

38%

BOT Bond

AFD

KEXIM (7,700m)

IBK

Targeted industry

CABEI KDB

Why now?

GOVERNMENT Bond

GOVERNMENT Bond Thailand (PDMO) is a Board member  Set criteria  Select corporate

้

Why now?

36%

 Toward becoming regional hub  Broadening investors’ base  Increasing product choices

Fund Management and Bond Market (PDDF.) Infrastructure Development Division

Presented by: Onpreeya Chungpanich Puttipong Kanna

ADB

2

Fund Management and Bond Market Infrastructure Development Division Bond Market Development Bureau Public Debt Management Office 14

PDDF Vision and Objective Bond Market Development Bureau, Public Debt Management Office

“Being Professional Asset Management Organization To Support Sustainable Public Debt Management and Bond Market Development�

1 To efficiently and effectively manage proceeds from debt

restructuring (Section 24/1) and issuance for bond market development (Section 25/1).

2. To minimize government cost of borrowing and default risk 3. To support sustainable bond market development

15

Public Debt Management Act Amendment B.E. 2551 : 1) Pre-funding & 2) Issuance for bond market development Bond Market Development Bureau, Public Debt Management Office

1 Debt Restructuring Section 24/1

• In a case that the amount of maturing debt is considered to be too large and / or inappropriate to be refinanced in one time on the same date, • MoF is allowed to Pre-fund the maturing debt one year in advance.

2 Bond Market Development Section 25/1

• In a case where the amount of borrowing required is considered to be insufficient for bond market development (e.g. balanced budget) • MoF can borrow for the purpose of bond market development through the issuance of benchmark bonds

16

Organization Chart Bond Market Development Bureau, Public Debt Management Office

Board of Directors Investment Committee (IC)

Fund Management

PDDF Manager Assistant Manager

Investment Policy and planning

Asset Manager 1. SCBAM 2. KASSET 3. KTAM

17

Internal audit

Compliance

Custodian : HSBC

Administration

PDMO and PDDF Workflow Bond Market Development Bureau, Public Debt Management Office

Matured debt 1

Over 55 Billion Baht

PDMO

Prefunding for Debt Restructuring

2 3 Debt Proceeds transferred to PDDF Repayment PDDF Investment Mandate Domestic markets • Gov / Gov G’teed securities • Highest rating fixed income securities • Reverse Repo

International markets • Major currencies • Highest rating fixed income securitis issued by Gov. / Gov. financial institutions, IFIs * Fully Hedge

4

Prefunding Interest Payment

PDDF

Investment Mandate Bond Market Development Bureau, Public Debt Management Office

Allocation

Investment Universe

Safe Asset >= 60 %

Domestic Markets • Fixed Income securities Issued and/or guaranteed by MOF •Reverse Repo (MoF’s securities as collateral) International Markets • Fixed Income securities issued and/or guaranteed by government’s financial Institutions & IFIs • Highest ratings and major currency * Fully Hedge

Other <= 40 %

•Other Fixed Income Securities (Corporate, SOEs) with highest rating

Deposit <= 10% of fund NAV 18

PDDF Milestone Bond Market Development Bureau, Public Debt Management Office

 Selected and appointed 3 asset managers: KASSET, KTAM and SCBAM  Selected and appointed 1 global custodian : HSBC  Negotiated and signed GMRA & ISDA with 5 counterparties : KBANK, SCB, KTB, HSBC, SCBT  Set up investment operating and monitoring system

 Successfully managed prefunding proceeds for LB11NA . Nov 2011 . restructuring in

.

19

Investment Performance: 1st period LB11NA Restructuring Bond Market Development Bureau, Public Debt Management Office

• 31 Oct 2011  PDMO prefunded for LB11NA restructuring  39 Bilion Baht (P/N 5.5 yr, 3.69% )  Equally allocated proceeds to PDDF’s fund manager

• 29 Nov 2011 (total 29 days)  PDDF total return 106.8 Million Baht (3.4473%)  PDDF transferred principle and return to PDMO • Principal 39,000,000,000.00 Baht LB11NA repayment Interest • Return 106,502,097.06 Baht Prefunding payment

Investment Performance: 2nd period SB129A Restructuring Bond Market Development Bureau, Public Debt Management Office

• 4 Nov 2011 – 31 Aug 2012 (total 301 days)  PDMO prefunded for SB129A restructuring  Total 154 Billion Baht  Proceeds transferred to PDDF as of 31 March 2012  80.443 Billion Baht  Equally allocated proceeds to PDDF’s fund manager

• As of 31 Mar 2012 • NAV 81.05 Billion Baht (3.42%) 20

Investment Strategy Bond Market Development Bureau, Public Debt Management Office

1st Period : LB11NA 31th Oct – 29th Nov 2011

2nd period : SB129A 4th Nov 2011 – 31th Aug 2012 as of 31 Mar 12

.

. .

 Gov/Gov G’teed  Highest rating FI securities  International FI securities  Deposit  Reverse Repo  Hedging The roles of PDDF in supporting Bond Market Development Bond Market Development Bureau, Public Debt Management Office

Primary Market – Increase short-term liquidity – Constant supply of government securities – Financial institution and private sector have more alternative sources for short-term fund raising

Secondary market – Increase turnover of government bond and corporate bond – Promote Private Repo operation

21

Looking Forward Bond Market Development Bureau, Public Debt Management Office

• Continuous investment management and monitoring • Estimated prefunding 30-100 Billion Baht per year • Public Debt Management Act amendment • To enable more effective and efficient investment of PDDF • Preparation for bond market development borrowing

• To support PDMO in continuously promoting domestic bond market • Capacity building

• Human resource and technology

Maturity Profile of Outstanding Debt amount over 55 Billion baht Bond Market Development Bureau, Public Debt Management Office

Refinanced FIDF FIDF

250,000

Budget Deficit TKK

SB129A 200,000

150,000

LB145B LB11NA

100,000

LB155A LB15DA

LB133A SB147A

SB166A

LB196A LB183B LB17OA

LB21DA ILB217A LB213A

LB283A

50,000

-

2555

2556

Series1 89, 206 99,

2557

2558

121 80, 132

2559 113 82,

2560 -

2561

2562

75, 86, 99,

2563

2564

2565

69, 70, 81,

2566

2567

2568

2569

2570

2571 61,

update : 30 Apr 2012

22

PDMO and PDDF toward Active

Debt Management Bond Market Development Bureau, Public Debt Management Office

Prefunding planning and execution

Front Office Debt Management 1 Debt Management 2

.

Bond Market Development Bureau

Reporting

.

Interest payment

.

Legal Advisory Internal Audit PR and Human Resource Development

23

Middle Office Policy & Planning

Back Office Payment Administration

Law Internal Audit HR & IT

29 May 2012

Domestic Bond Market Development A. Evolution of Bond Market Development (1995 – Present) • Innovation of Government Debt Securities • Equilibrium of Thai Bond Market

B. Building up of Benchmark Bond (FY2007 - FY2012) • Revised the Strategy of Benchmark Bond Issuance • Commitment of Bond Supply • FY 2012 Market’s Favorite Benchmark Bond

C. Bond Supply FY2012 + Funding Needs FY2012 - FY2015 D. Well-Developed Bond Market Improved Government Debt Profile Dramatically • ATM Lengthened • Cost Lowered • Well-Balanced Fixed-Float Ratio • Well-Distributed Maturity Profile

Thai Bond Market Has Grown Strongly for More Than a Decade % of GDP

Domestic Bond Market Capitalisation = 7.7 THB Trillion

128%

140%

As of March 2012 (Classified by Types of Issuers)

120% 100%

92% 77%

80%

67%

60%

24%

40%

7.7 THB Trillion

Asian Fin. Crisis

20%

1%

Corp. Bond

19%

SOE Bond

6%

March 2012

Bank Laon / GDP

Equity / GDP

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

12% 1992

0%

Baht Bond

BOT Bond

Bond Market / GDP

Maturity Profile

2.9 THB Trillion

38%

BOT ATM = 1 yr GOVT ATM = 6 yrs 7 mts

BOT vs GOVT Bond 14%

68% BOT < 1 yr

Presented by: Pothirat Kijsriopak Ittipong Kanluan

GOVT Bond 18% MOF

29%

20% 3%

28%

20%

2-3 yr

3-5 yr

6-10 yr

11-50 yr

2.7 THB Trillion

36%

Government Bond Market Development Division Bond Market Development Bureau Public Debt Management Office 24

25

A. Evolution of Bond Market Development (1995 – Present) Bond Market Development Bureau, Public Debt Management Office

• The Thai Bond Market Has Developed Rapidly and Efficiently • Birth of Bonds • Innovation of Government Debt Securities (FY2007 – FY2013) • Equilibrium of Thai Bond Market • By Issuers • By Credit Rating • By Investors

26

Bond Market Developed Rapidlyand andEfficiently Efficiently The The ThaiThai Bond Market hasHas Developed Rapidly Bond Market Development Bureau, Public Debt Management Office

Post Crisis – 2000 :

2007 – 2010 :

Next Step 2011-13:

 Bond Market Capitalisation tripled  Government Bonds Outstanding grew by 50 times  Government Bond Market Share jumped from 3% in 1997 to 44% in 2000

 Regular Benchmark Issuance  New Product Development  Regular Market Dialogue with BoT and PDs

(Market Deepening Oriented)  50-yr Bond, ILB, Electronic Retail Bond  Upgrade PD Privileges  Regional Linkage (CGIF)  Amortizing Bond  Bond Switching and Bond Consolidation

Volume Oriented

Development Oriented

% of GDP

THB Trillion

67%

Pre-Crisis - Illiquid Bond Market - Absence of Benchmark Bond - Dominated by SoE’s Bonds

Development of Government Debt Securities Bond Market Development Bureau, Public Debt Management Office

50-year Benchmark Bond March 2nd 2011

12-year and 18-year Fixed-rate Promissory Bond

30-year Benchmark Bond

December 22nd 2010

April 23nd 2008

10-year Inflation Linked Bond July 11th 2011

6-year Step-up Savings Bond

5-year Step-up Savings Bond

June 7th 2010

July 15th 2009

4-year Floating Rate Bond

3-year Retail Bond @ ATM

July 27th 2009

September 12th 2011

FY 2008 27

2009

2010

2011

2012-2013

FY2007 – FY2013

Innovation of GOV’T Debt Securities

FY 2012-2013

FY 2011

FY 2007-10

Bond Market Development Bureau, Public Debt Management Office

30-yr Loan Bond

• Lengthen average-time-to-maturity ATM Government Debt Portfolio  5.7 yrs to 6.1 yr • Meet long term investors’ demand

Floating Rate Bond

• Increase floating debt ratio (10% to 18%) • Promote BIBOR (Bangkok Interbank Offered Rate)

Step-up Savings Bond

• Broaden investor base – Retail investors • Low interest burden at the initial periods of bond

Fixed Rate Promissory Note

• Broaden investor base – Insurance / Long-term investors • Non-Benchmark tenors

50-yr Loan Bond

• Combat low interest rate + Lengthen average time-to-maturity • 4th country in the world (1st : UK 2nd : France 3rd : China)

Inflation-Linked Bond (ILB)

• Strong anti-inflationary signal • Deepen the Development of the Bond market • 1st country in Emerging Asian Economies

Retail Bond @ ATM for Micro Savers

• Lower Minimum Amount to Purchase • Offer throughout the year • Can be purchased via ATM, in addition of Bank Retail Branches

Amortizing Bond

• Suitable financing instrument for the government’s investment mega-project in the form of PPP • Pay back the bond principal by installments  Promote the government’s fiscal discipline

Bond Switching & Consolidation

• Allow both issuer and investors to manage and improve their portfolio • Larger outstanding size + Less bond series  more liquidity in the secondary market

PDDF

Upgrade PD Privileges

(Public Debt Restructuring and Domestic Bond Market Development Fund)

CGIF

Baht Bond

(Credit Guarantee and Investment Facility)

Equilibrium of Thai Bond Market Bond Market Development Bureau, Public Debt Management Office

Issuers

• 80 percent of Thailand’s debt securities were issued by Government, Central bank and State-owned Enterprises

Credit Rating

• 98 percent of Thailand’s debt securities are classified as Investment Grade by local rating agencies

Investors

• Thailand’s government debt securities are held by a wide group of investor types

Thailand Bond Market (Classified by Issuers)

Thailand Bond Market (Classified by Credit Rating)

Government Bonds (Classified by Types of Investors)

BBB Non-rated

2% 2%

A AA

Private Sector

20% SOEs

CB 6%

7%

NR12%

5% AAA

Government

36%

6% Central Bank

38% Source : ThaiBMA (12 April 2012)

4%

Government

SOEs

36%

6

%

Central Bank

38% Source : ThaiBMA (12 April 2012)

Household and Non-profit

Insurance and Other Corporation

33%

15% Depository Corporation

35% Source : CB (30 January 2012)

28

29

B. Building up of Benchmark Bond (FY2007-FY2012) Bond Market Development Bureau, Public Debt Management Office

• 2007: PDMO Revised the Strategy of Benchmark Bond Issuance in 3 Ways • Keep Our Word to get Investor Confidence for the Plan  Firm Committed Supply of Benchmark Bond Regardless of Budget Uncertainty • Key Success Indicators (FY2008 – FY2011) • Trading Volume • Turnover Ratio • Demand Concentration • Auction Price

• Market’s Favorite Benchmark Bond (FY 2012) • By Outstanding • By Trading Value • By On-the-run Benchmark Tenors

30

• 2007: PDMO Revised the Strategy of Benchmark Bond 2550 .

2007: PDMO Revised the Strategy of Benchmark Bond Issuance in 3 ways Issuance in 3 Ways ,

Bond Market Development Bureau, Public Debt Management Office

from Once a Week

I. Reduce Auction Frequency

to

Every Other Month

• Full Capacity of All Government Debt Securities (2012) 

II. Increase Auction Size

(to Create Even Distribution of the Benchmark Bond Supply over the Year)

Tenors: 3-5-7-10 yr 15,00020,000

1,100,000 THB Mil

Unit : THB Mil

8,00010,000

10,00012,000

15,00020,000

12,00015,000

6,000•Keep Our Word to get Investor Confidence for Plan 

4,000 FY

8,000 FY

FY

FY

FY

FY

FY

F

Firm Committed Supply of Benchmark Bond Regardless of III. Increase Outstanding Size

Tenors: 3-5-7-10 yr 150,000200,000

Budget Uncertainty

Unit : THB Mil

80,000100,000

• Key Success 50,000Indicators

100,000120,000

100,000120,000

120,000150,000

80,000 40,000 • Trading Volume FY

FY FY • Turnover Ratio • Demand Concentration • Auction Price

FY

• Market’s Favorite Benchmark Bond • By Outstanding • By Trading Value • By On-the-run Benchmark Tenors

31

FY

FY

FY

F

Keep Our Word to get Investor Confidence for the Plan

Firm Committed Supply of Benchmark Bond Regardless of Budget uncertainty Bond Market Development Bureau, Public Debt Management Office

THB Mil.

+40% Plan

FY2009

Actual

+2%

Higher government funding needs due to Stimulus Package

+170%

approx.+250,000 THB Mil.

Total Funding needs increased from:

+33%

+86%

420,000 THB Mil. to 670,000 THB Mil.

59%)

(+

Benchmark Bond

Treasury Balance = 278,694 THB Mil.

Non Benchmark Bond

Savings Bond

T-Bill (Outstanding)

Others

THB Mil.

FY2010

Plan

0%

Actual

-8%

Lower Borrowing needs due to Economic Recovery approx. -160,000 THB Mil.

-45%

+118%

Total Funding needs decreased from:

-51%

800,000 THB Mil to 640,000 THB Mil

(-20%) Benchmark Bond

Treasury Balance = 417,166 THB Mil.

Non Benchmark Bond

Keep Our Word to get Investor Confidence for the Plan

Savings Bond

T-Bill

Others

Firm Committed Supply of Benchmark Bond Regardless of Budget uncertainty Bond Market Development Bureau, Public Debt Management Office

THB Mill

FY 2011

Plan

Actual

-3%

Higher than expected Revenue collection approx. -250,000

THB Mil.

Total Funding needs decreased from: 700,000 THB Mil to 400,000 THB Mil

-38%

(- 36%)

-26% +344%

Benchmark Bond

Treasury Balance = 510,180 THB Mil.

Non Benchmark Bond

Savings Bond

T-Bill (Outstanding)

ILB

-85%

Others

32

FY 2008-FY2011 Key Success Indicators FY 2008-FY2011 5 yr Benchmark Bond : Highest Secondary Trading Volume in Key Success Indicators every year (accounted for ¼ of total trading volume) Unit: % share of Market 5 yr Benchmark Trading Volume Bond : Highest Secondary Trading Volume in every year (accounted for ¼ of total trading volume) % % Unit: % share of Market Trading Volume % %

27

27%

9

20

20

28% 20%

FY

FY

FY

FY

7

% Top 10 Gov’t Bond Series – Accounted for 84% of all Gov’t Bond trading in Secondary Trading Volume FY FY FY FY FY Unit: % share of Market Trading Top 10 Volume Gov’t Bond Series – Accounted for 84% of all Gov’t Bond trading in Secondary Trading Volume %

84

Unit: % share of Market Trading Volume

75%

75 FY %

Bond Market Development Bureau, Public Debt Management Office

Bond Market Development Bureau, Public Debt Management Office

LB155A

5 yr Benchmark Bond : Higher Turnover Ratio LB133A

LB145B LB133A

3.1

1.5 LB133A

76%

76% FY

84%

LB15DA

2.8

LB145B

2.4

4.2 2.4

FY

2.8 FY

FY

FY USD FY FY FY FY Unit: Billion +3.2 bps +1.4 bps Well developed Benchmark Bond pays off : Even with greater size of issuance, the cost of funding is still at market rate

+1.2 bps

+1.2 bps

FY

LB15DA

Well developed Benchmark Bond pays off : Even with greater size of issuance, the cost of funding is still at market rate

14.7

7.5 FY08

15.0 +3.2 bps

12.8

14.7

7.5

77% FY

4.2

+1.4 bps

80% FY

FY

Unit: Billion USD

80% 77%

1.5

FY

LB155A

LB133A

3.1

FY

2. Turnover Ratio 4. Auction Price

1. Trading Volume 2. Turnover Ratio 5 yr Benchmark Bond : Higher Turnover Ratio 3. Demand Concentration 4.

Auction Price

28

20%

79%

1. Trading Volume 3. Demand Concentration

15.0

12.8 -0.4 bps

FY09

FY10

FY11

-0.4 bps

FY

33

FY

FY

FY

FY

FY08

FY09

FY10

FY11

Total GOVT Bond = 45 Series

TOP 5

(2,277,XXX THB Mil)

> 100,000 THB Mil in Size (45% of Trading Volume)

Next 10 > 50,000 THB Mil in Size

(28% of Trading Volume)

Bond Market Development Bureau, Public Debt Management Office

Outstanding size (THB Mil.)

FY-to-date Market Share of Trading Volume in Secondary Market (Oct 11-Apr 12)

Top 5 (>100,000)

3

TOP 5

Next 10

Bottom 30

45%

28%

27%

3

Next 10

0

50

100

(50,000-100,000) FY 2012 on-the-run LBs

10

ILB 10 . % . %

5

FRB 50

2

30

9

A

A LB

A LB

15

LB A LB326A LB DA LB27DA

LB A LB616A

A

LB165A LB A

OA LB

LB

A

NA LB

A

LB

LB

LB

A

NA

LB

7

LB A LB193A

DA LB

A

LB A LB416A

A

LB

A

1

LB

5 13 19

A

2

LB

A LB

7

LB

A

LB

DA

A

DA

LB

LB

A LB

FY 2012 Market’s Favorites

5

2

LB

A LB

4

A

A LB

1

DA

A LB

7

LB

A LB

4

LB

A

NA LB

9 16

LB A LB176A

A

LB

10

5

LB

10

OA

6

LB

1

ILB217A ILB A

B LB

7

LB21DA LB DA

A

3

A

2

LB

3

LB

LB

B

LB155A LB A

TTM (Year)

LB DA LB15DA

20

A

5

LB

7

LB

30

7

3

All 3-5-7-10 on-the-run Benchmark Bond Has Turnover Ratio between 1.2 – 2.7

Classified by Turnover Ratio

(while market turnover ratio = 0.45) Bond Market Development Bureau, Public Debt Management Office

3

On-the-run Benchmark Bond (Expected Outstanding Size @ end of FY 2012)

Turnover Ratio

Outstanding ≥ 100,000 MB Outstanding 50,000-100,000 MB Outstanding ≤ 50,000 MB

2.7

FY 2012 on-the-run LBs

2.3

2 1.6

3

3

30

DA LB

A

A LB

LB

A LB

A

A LB

LB

OA LB

A

A LB

LB

A LB

A

A LB

NA

A LB

LB

A LB

LB

A

DA LB

A

A LB

LB

A LB

LB

A

A LB

DA

A LB

LB

A LB

LB

A

NA

LB

LB

DA LB

B

A LB

A

NA LB

A

A LB

LB

A LB

LB

A LB

10 20 5

LB

A

A

B LB

LB

A LB

15

ILB

DA LB

OA LB

DA LB

10

LB DA LB AA LB LB155A

LB21DA LB DA

7

A

LB193A LB A

5

LB

LB A LB176A

1

LB DA LB15DA LB A

1.2 1.2

50

Turnover Ratio 0.2 – 1.0

Nearly No Trading

34

C. Bond Supply FY2012 + Funding Needs FY2012-FY2015 Bond Market Development Bureau, Public Debt Management Office

• Annual Funding Needs Will Always Be around 600,000 THB Mil. (FY2012-FY2015) • FY2012 Fund Raising Plan by Bill & Instruments (Including Water Management and Insurance Decree ) • Fiscal Year-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil. • Funding Instruments : Local Bond Market VS Foreign Bond Markets • Structure of Thai Inflation Linked Bond (Inaugural ILB, July 2011)

35

Annual Funding Needs Will Always Be around 600,000 THB Mil. Bond Market Development Bureau, Public Debt Management Office

TENTATIVE

Water Decree

THB Mil.

350,000

1,000,000

06/13

Insurance Decree

50,000

TKK Restructuring 94,170

80,000

FIDF 500,000

98,161

TKK

Restructuring 67,740

260,000

FIDF

340,122

Restructuring 58,940

FIDF

Annual Funding Needs (THB Mil.)

25,000 56,582

441,061

165,000

Deficit

129,124

64,970

139,171

113,014

25,000

52,000

232,575

172,003

199,239

300,000

300,000

58,940

75,171

219,222

400,000

Deficit

200,666

300,000

Deficit

2008

2009

2010

2011

2012F

2013 F

2014 F

2015 F

246,582

686,962

656,746

424,620

1,140,122*

536,973

722,533

653,333

*Not Including Pre-Mature Debt Restructuring of 167,000 THB Mil. (TKK = 149,000 THB Mil. & FIDF = 18,000 THB Mil.)

FY 2012 Fund Raising Plan by Bill

• Deficit • FIDF

400,000 340,122

• Water • Insurance

350,000 50,000

• Pre-Mature Debt – TKK Restructuring – FIDF Conversion

149,000 18,000

As of April 26, 2012

1,140,122MB

1,307,122MB

Bond Market Development Bureau, Public Debt Management Office

Insurance

THB Mil.

TENTATIVE

Water

600,000

17%

300,000

9% FIDF, 121,099

Pre-Mature TKK Restructuring, 31,000

35% Pre-Mature TKK Restructuring, 71,000

39%

Pre-Mature FIDF Conversion, 18,000

Pre-Mature TKK Restructuring, 47,000

FIDF, 81,023

FIDF, 48,000 FIDF, 90,000

Deficit, 93,610

Deficit, 143,736

Deficit, 162,654

-

Q1

Q2

Q3

Q4

121,099 MB

214,610 MB

462,736 MB

508,677 MB 36

FY2012 Fund Raising Plan by Instruments (Including Water Management and Insurance Decree ) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Units : THB Mil.

Instruments

Tenors (Yrs)

1. Government Bond 1.1 Benchmark Bond

Sizable Outstanding Amount → To Enhance Liquidity  Regular Issuance → To Build Yield Curve

70,000 100,000 65,000 52,110 35,000 35,000 26,436 25,000 48,450 60,000 105,000

4 (LB165A) 10 (ILB217A)

1.2 Floating Rate Bond(FRB) 1.3 Inflation Linked Bond (ILB) 2. Savings Bond / Retail Bond 3. Permissory Note (P/N) For FIDF 1 For FIDF 3 For Budget Deficit Pre-Mature FIDF Conversionof P/N

3+ 4+ 4+ 4+

4. Fixed Rate Promissory Note (Fixed-P/N) For Budget Deficit 6. Bank Loan Bank Loan - Water Management Bank Loan - Insurance Pre-Mature TKK Restructuring of Bank Loan

3-year Benchmark ~50,000 MB on LB155A ~ 15x,xxx MB ~20,000 MB on LB15DA ~ 13x,xxx MB

3 (LB155A, LB15DA) 5 (LB176A) 7 (LB193A) 10 (LB21DA) 15 (LB27DA) 20 (LB326A) 30 (LB416A) 50 (LB616A)

 Stable Supply → To Maintain Investor Trust

7. R-Bill

26 April 2012

Benchmark Bond :

~400,xxx

THB Mil.

Total Government Bond :

~500,xxx THB Mil.

107,099 19,573 50,654 -18,000*

12/25/40

35,800

2-4 2-4

350,000 50,000 -149,000** 72,000 1,140,122

6 mths Total Funding Needs (Not including Pre-Mature Restructuring) Total Fund Raising

* Restructuring to 5-yr LB (18,000) ** Restructuring to 5-yr LB (16,000), 7-yr LB (22,000), 4-yr FRB (16,000), 20-yr LB (35,000), ILB (60,000)

1,307,122

As of April 26, 2012

FY-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil.

By Source

(33% of 1,307,122 THB Mil.) or (47% of Total less Decree)

(As of 20 April 2012) (As of April 26, 2012)

Bond Market Development Bureau, Public Debt Management Office

New Funding = 800,000

Debt Restructuring = 507,122

THB Mil

Funding Needs = 1,140,122 THB Mil

229,154 UN-Raised 170,846

Units : THB Mil.

350,000

130,573 UN-Raised 209,549

43%

62%

103,000

50,000 Raised

UN-Raised

Deficit

Budget Deficit (400,000)

Water Decree

THB Mil.

0%

UN-Raised

UN-Raised 31% 18,000 46,000 0% Pre-Mature Pre-Mature Pre-Mature TKK Pre-Mature FIDF TKK Restructuring FIDF Conversion Restructuring Restructuring (149,000) (18,000)

Raised

0%

Insurance Decree

FIDF FIDF (340,122)

Water Decree Insurance Decree (350,000) (50,000)

FY-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil.

By Product

(33% of 1,307,122 THB Mil.) or (47% of Total less Decree)

(As of April 26, 2012)

Units : THB Mil.

R-Bill Bank Loan

0%

Issued

72,000

0%

Plan

Water + Insurance 400,000

91%

P/N

192,899 20,227

SB

5%

5,000

FRB

100,000

ALL LBs = 500,xxx THB Mil.

50%

24,450 24,000

ILB

50%

30,000

LB

COMMITTED Benchmark = 400,xxx THB Mil.

30,000

43% 174,046

37

234,500

Funding Instruments : Local Bond Market VS Foreign Bond Markets Bond Market Development Bureau, Public Debt Management Office

Well Diversified Investors Ensures Funding Needs

FYFull2012 Full Capacity* : 1,150,000 Mil Capacity* of All Government Funding Instruments 1,150,000THB THB Mil.

Potential Demand for Gov’t Bond 2012

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

LB 3 yr

150,000 THB Mil.

LB 5 yr

120,000 THB Mil.

LB 7 yr

80,000 THB Mil.

LB 10 yr

80,000 THB Mil.

LB 15 yr

60,000 THB Mil.

LB 20 yr

60,000 THB Mil.

LB 30 yr

30,000 THB Mil.

LB 50 yr

20,000 THB Mil.

Benchmark Bond

CB 6% LB 5/10 ILB

50

Insurance and Other Corporation

NR12%

30 20

SB

15

10 7 5

Benchmark Bond

~600,000 THB Mil. (52%)

Savings Bond

~100,000 THB Mil. (9%)

Promissory Note

~100,000 THB Mil. (9%)

Fixed Rate Promissory Note ~50,000 THB Mil. (4%)

3

Household and Non-profit

~50,000 THB Mil. (4%)

Floating Rate Bond

Depository Corporation

~200,000 THB Mi (18%)

Total

1,150,000 THB Mil. (100%)

35%

Outstanding of Foreign Debt

Depository Corporations

400

- Retail - Non-profit org.

200

Non-Residence

?

• To keep the presence of KOT Bond (Kingdom of Thailand) in the foreign market

Equiv. 28,000 THB Mil Soft Loans JBIC IBRD Other

Bank loan FRB / LB

• To diversify portfolio of government debt

Equiv. 41,000 THB Mil (1.4% of Gov’t Debt)

Commercial Papers Samurai bond 5 yr 20,000 Yen Mil Samurai bond 7 yr 10,000 Yen Mil MTN 40 USD Mil

400

Source : CB (30 January 2012)

* Under favorable market liquidity + using All funding instruments

Equiv. 13,000 THB Mil

33%

15%

- Life Insurance - Pension Funds

~50,000 THB Mil. (4%)

Inflation-Linked Bond Bank Loan

THB Bil.

P/N LB

64,800 Yen Mil 66 USD Mil 19 USD Mil (as of Oct 2011)

• To maintain KOT Bond as a reference benchmark yield for Thai private sector issuers • To avoid crowding out effect on domestic bond market Concerns : exchange rate risk / swap cost / natural hedging

Structure of Thai Inflation Linked Bond (Inaugural ILB, July 2011) Bond Market Development Bureau, Public Debt Management Office,

Format

Capital Indexed Bond (with Principle Protection)

Currency

Thai Baht

Tenor

10 years

Programme Size

40,000 THB Mil. (1.3 bil USD equiv.)

Interest Payment

Every 6 months

Index

Headline CPI

Indexation Lag

3 months

Index Ratio

CPIt /CPI0 (TBMA’s calculation)

Real Yield

1.2

Repayment Method

Bullet

Next Step Continuing Issuance

PD’s responsibility

8 INTERNATIONAL AWARDs

Allocations Foreign Institutions

Local Institutions

15,000 MB

20,000 MB

5,000 MB

Local Retail

Subscription : approx. 1.6 times

Enhance ILB liquidity  

FY 2012 : Develop regular annual auction plan (every quarter) FY 2012 : Top-up the existing tenor to enhance liquidity : 60,000 THB Mil. (2 USD Bil equiv.)

(15,000 THB Mil. each in Feb Apr Jun and Aug) FY 2013 : Issue other Benchmark tenors (5-15years ILBs)



FY 2012 : Maintain portion of successful bid in ILB primary market FY 2013 : Maintain portion of ILB trading in secondary market FY 2013 : Provide firm bid / ask spreads in secondary market Best Sovereign Bond 2011 Best Thailand Deal 2011 Best Local Currency Bond 2011 Best Thailand Deal 2011 Thailand Capital Markets Deal of the Year 2011 Deal of the year from Asia Outstanding Issuer of the Year The Most Impressive Local Currency 2011

Enhance Liquidity

: Asiamoney Awards : Asiamoney Awards : FinanceAsia Achievement Awards : FinanceAsia Achievement Awards : IFRAsia Asia Awards : Euro Money : Asset Asian Awards 2011 : Euroweek Asia

38

D. Well-Developed Bond Market Improved Government Debt Profile Bond Market Development Bureau, Public Debt Management Office

• Public Debt Outstanding (as of Dec 2011) = 4.3 THB Trillion (40% of GDP) • Total GOV’T Debt (Direct + FIDF) • Average-Time-to-Maturity (ATM) • Average Cost • Fixed : Float

= 3.04 THB Trillion (71% of Public Debt) = 6y 4m = 4.6% = 82 : 18

• Well-Developed Bond Market Improved GOV’T Direct Debt Profile Dramatically • Average-Time-to-Maturity (ATM) = 7y 5m • Average Cost = 4.4% • Fixed : Float Ratio = 82 : 18 • Maturity Distribution Profile = 52-20-28

• Full Capacity of All Government Funding Instruments (FY2012)  1,150,000 THB Mil

• Maturity Profile of GOV’T Funding Instruments (Strategic Framework) • Average-Time-to-Maturity (ATM) • Fixed : Float • Maturity Distribution Profile

39

= 9y = 70 : 30 = 50-30-20

Public Debt Outstanding (as of Dec 2011) = 4.3 THB Trillion (40% of GDP) Bond Market Development Bureau, Public Debt Management Office

Components of Public Debt

Units : THB Mil.

1. Government Debt (excluded FIDF)

1,914,420

2. Government Debt (for FIDF)

1,174,101*

3. Non-Financial State Enterprise Debt

1,061,012

4. Special Financial Institutions Guaranteed Debt Public Debt Outstanding (as of Dec 2012)

Special Financial Institution Guaranteed Debt

3

% 0.15 THB Trillion

148,364 4,297,897

*Including 32,000 THB Mil. of Prefunding

Non-Financial State Enterprise Debt

25%

GOV’T Debt

1.06 THB Trillion

45% 1.95 THB Trillion

GOV’T Debt (for FIDF)

27% 1.17* THB Trillion

40

 Average-Time-to-Maturity (ATM) = 6y 4m  Average Cost = 4.6%  Fixed : Float = 82 : 18 As of Dec 2011

Total GOV’T Debt = 3.04* THB Trillion (71% of Public Debt) * Excluded 45,898 THB Mil. of Foreign Debt

Bond Market Development Bureau, Public Debt Management Office Assumptions : 6 months BIBOR = 3.245%, 6 months Fixed Deposit Rate = 2.38125%

FIDF 1

 ATM = 4y 8m  Avg. Cost = 5.0%  Fixed : Float = 82 : 18

FIDF 3

300,000 233,023

Maturity Profile

40%

10 yrs +

14,000

year 6 - 10

35,000

32,000

69,000 63,800

37,900

25,000

7% next 5 yrs

40,000

15,000

GOV’T Debt (for FIDF) = 1.17** THB Trillion 75,000

63,178 39,836

144,099

16,731

64,124 64,970

58,440

-

18,000

100,000

65,000

200,000

53%

TTM

.............

Fiscal Year

TKK

 ATM = 7y 5m  Avg. Cost = 4.4%  Fixed : Float = 82 : 18

On-lending Loan

52%

next 5 yrs

year 6 - 10

10 yrs +

13,000

27,000

20,000

5,500

5,000

41,900

28%

.............

-

61,950

50,000

43,000

47,000

TTM

Maturity Profile

0000 20%

15,700

18,900 76,700

31,000

-

59,000

40,000

86,632

138,000

145,994

82,230

GOV’T Debt (exclude FIDF) = 1.87*** THB Trillion 93,830

100,000

199,239

172,003

200,000

188,222

58,940

300,000

Budget Deficit 7,612

140,170

**Including 32,000 THB Mil. of Prefunding

Fiscal Year

***Excluded 45,898 THB Mil. of Foreign Debt

(1) (2) (3) (4)

Well-Developed Bond Market Improved GOV’T Direct Debt (1.87 THB Mil.) Profile Dramatically

ATM Lengthened Cost Lowered Well-Balanced Fixed-Float Ratio Well-Distributed Maturity Profile

Bond Market Development Bureau, Public Debt Management Office

As of Dec 2007

Average-Time-to-Maturity LENGTHENED by 2 yrs

As of Dec 2011

ATM

7y 5m

ATM

5 y 3m Avg. cost

Avg. Cost LOWERED by 10 bps

4.5%

.

Avg. cost

4.4%

(While ATM Lengthened by 2 yrs)

Float

Well-Balanced Fixed/Float Ratio (Target : Fixed/Float ratio = 80 : 20)

10%

Float

Fixed

Fixed

90%

82%

Maturity Profile as of Dec 2009

61%

Well-Distributed Maturity Profile next 5 yrs

41

Maturity Profile as of Dec 2011

52% 24%

(Target : Maturing Debt in the next 5 yrs ≤ 50% of Total Debt)

18%

year 6 - 10

20%

15% 10 yrs +

next 5 yrs

year 6 - 10

28%

10 yrs +

Full Capacity* of All Government Funding Instruments

1,150,000 THB Mil.

Bond Market Development Bureau, Public Debt Management Office

LB 3 yr

150,000 THB Mil.

LB 5 yr

120,000 THB Mil.

LB 7 yr

80,000 THB Mil.

LB 10 yr

80,000 THB Mil.

LB 15 yr

60,000 THB Mil.

LB 20 yr

60,000 THB Mil.

LB 30 yr

30,000 THB Mil.

LB 50 yr

20,000 THB Mil.

50 30

20

Benchmark Bond

15

10 7 5

Benchmark Bond

~600,000 THB Mil. (52%)

Savings Bond

~100,000 THB Mil. (9%)

Promissory Note

~100,000 THB Mil. (9%)

Fixed Rate Promissory Note ~50,000 THB Mil. (4%)

3

Inflation-Linked Bond

~50,000 THB Mil. (4%)

Floating Rate Bond

~50,000 THB Mil. (4%) ~200,000 THB Mi (18%)

Bank Loan

Total

1,150,000 THB Mil. (100%)

* Under favorable market liquidity + using All funding instruments

(A) ATM = 9 yrs (B) Fixed : Float = 70 : 30 (C) Maturity Distribution Profile 50 - 30 - 20

FY2012 Maturity Profile of GOV’T Funding Instruments

Bond Market Development Bureau, Public Debt Management Office

50% (≤ 5 yrs)

Benchmark Bond

580,000 THB Mil 150,000

ATM Cost (Avg. past 3 yrs) Fixed : Float

350,000 THB Mil

10y 8m +5 bps 100 : 0

20% (≥ 11 yrs) 210,000 THB Mil

15 15

20 20

20,000

30,000

50,000

60,000

80,000

100,000

60,000

120,000

30% (6-10 yrs)

80,000

150,000

-

55

6

7

10 11 10

30 30

25

150,000

Fixed P/N 50,000

90,000

Bank Loan

10 11

ATM Cost (Avg. past 3 yrs) Fixed : Float 5,000

50,000

6

25,000

25,000

25,000

5

5,000

Savings Bond

25,000

100,000

FRB

10 11

15

20

25

6y 11m + 80 bps 65 : 35

30

40

15

20

25

 Not-to-Collide with Benchmark Tenors

30

30,000

5,000

6

5,000

50,000

5

25,000

25,000

1

25,000

25,000

-

ILB

50,000

100,000

50,000

1

50,000 10,000

100,000

90,000

50,000

50,000

Alternative Instruments

P/N

50,000

150,000

50,000 10,000

100,000

50 50

40

30,000

3

1

40

50

42

Bond Market Development Bureau Tel. FAX

Government Bond Market Development Division E-mail Pimpen Ladpli Natnontra Vilaidaraga Wiroj Prakeetawest Pothirat Kijsriopak Ittipong Kanluan Raveewan Buanung Anong Chaithong

02-271-7999 02-357-3576

Extension

pimpen@pdmo.go.th natnontra@pdmo.go.th wiroj@pdmo.go.th pothirat@pdmo.go.th ittipong@pdmo.go.th raveewan@pdmo.go.th anong@pdmo.go.th

5802 5820 5819 5812 5806 5801 5817

Fund Management and Bond Market Infrastructure Development Division E-mail Nattakarn Boonsri Onpreeya Chungpanich Puttipong Kanna Taninrat Wongsuppapat Wantanee Po-ngam

Extension

nattakarn@pdmo.go.th onpreeya@pdmo.go.th puttipong@pdmo.go.th taninrat@pdmo.go.th wanthanee@pdmo.go.th

5803 5805 5808 5811 5814

International Bond Market Policy Division E-mail Chatmanee Sinsiri Busabong Tantamaneerat Veeraya Julamont Laksika Tengpratip Thatree Intharasut

เ็ ม เ ่

Extension

chatmanee@pdmo.go.th busabong@pdmo.go.th veeraya@pdmo.go.th laksika@pdmo.go.th thatree@pdmo.go.th

ชี

5804 5818 5807 5813 5815

ี้ เ ศ

่

ณ