Kingdom of Thailand Bond Market
Financing Thailand’s Future & Connecting ASEAN
Highlights Q&A with Director-General • Political Situation and Impact on ... - Credit Rating Outlook - Government Bond Auction • NCPO’s Roadmap • Savings Bond Q4/FY2014 • PDMO’s Role in supporting AEC Integration in 2015 Progress Update • Bond Switching : Source Bonds for H1/FY2015 • Toward ASEAN “Preferred Destination”
Basic & Essentials • • • • •
Public Debt Outstanding and Its Composition Bond Market Capitalization and Its Composition Total GOVT Bond Supply Issuing in FY2014 Government Bond Auction Result in 3 Quarters of FY2014 Non-Resident Holding in Domestic Bond
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Domestic Bond Market Development A. Highlights • • •
Q&A with Director-General Chularat Suteethorn
Safe Haven : Retail & Long-term Savings Bonds Auction Schedule Q4/FY2014 -
Government Bond SOE Bond and Term-Loan T-Bill Supply
1 B. Progress Update • •
Bond Switching : Source Bonds for H1/FY2015 Toward ASEAN “Preferred Destination”
14 C. Basic & Essentials • • • • •
Public Debt Outstanding and Its Composition
Bond Market Capitalization and Its Composition Total GOVT Bond Supply Issuing in FY2014 Government Bond Auction Result in 3 Quarters of FY2014 Non-Resident Holding in Domestic Bond
19
This booklet is produced and printed in-house by Bond Market Development Bureau Public Debt Management Office , Ministry of Finance, Kingdom of Thailand This booklet can be downloaded at www.pdmo.go.th
e-book
A: Highlights • Q&A with Director-General • Safe Haven : Retail and Long-term Savings Bond • Auction Schedule Q4/FY2014 -
Government Bond SOE Bond and Term-Loan T-Bill Supply
1
Q&A with Director-General Q : Do you have any concerns that the recent political incidents may lead to a downgrade of or negative outlook for Thailand’s sovereign rating?
Chularat : The period of political instabilities over the past 8 months has led to lingering concerns over the possible negative impact on Thailand’s sovereign ratings. As we have seen, the recent events have already led the Fiscal Policy Office (FPO) to revised growth forecast for this year to around 2.6%.
Chularat Suteethorn Director-General of Public Debt Management Office
Regarding the direct impact on credit ratings, PDMO has always maintained an open line of communication with all credit rating agencies to ensure that they are kept informed of any incidents of concern and the responding government plan of action. I am pleased to say that all of the credit rating agencies have reaffirmed Thailand’s credit rating mainly citing the fact that political situation has not weakened Thailand’s fundamental credit strength, enabling the government to prudently manage its finances during political and economic turbulences. One of our biggest strengths is the current public debt structure that has been brought about through PDMO’s policy to consistently issue sizable benchmark bonds to develop the domestic bond market. The reliance on domestic funding has not only reduced foreign currency debt to less than 2% meaning almost no exposure to currency risk, but refinancing risk has also been mitigated as the average time to maturity of the portfolio has been lengthened by about 5 years (currently at 9 years 8 months). Over the medium term, it is expected that the government will continue to adhere strictly to fiscal sustainability targets by maintaining public debt to GDP ratio at 47% which is well below target of 60% and debt service to expenditure below 15% at around 11-12%. In addition, Thailand’s external balances remain strong with international reserves 3 times external debt and 11 times imports, this compares favourably to peers in the same rating categories. All in all, I believe that the credit outlook is currently stable, nevertheless, it is important to strengthen our credit fundamentals.
Q : What about the impact on demands for government bonds? Chularat : The government bond auction results suggest no negative impact from the political situation. Throughout the period of political uncertainty dating back to December last year when the Parliament was dissolved, the constitutional court decision to oust PM Yingluck, the transition of power on 22 May by the National Council for Peace and Order (NCPO), the government bond auction results have remained acceptable throughout where almost all issuances were fully allocated and most accepted bids were well below market yields.
2
Q&A with Director-General I believe that this has been made possible because of the trust that we have gradually strengthen with the investors over the years as a result of keeping our promise to issue bonds as scheduled. Also, the sharing of information in an open and transparent manner, in particular, both PDMO and investors have benefited from regular market dialogue and specific group meetings.
Q : When can investors expect to see prolong periods of political stability, is there a definite Roadmap from the NCPO’s?
Chularat :
First of all, in the short term, I think that the NCPO has stablised a very fragile and
potentially dangerous political deadlock in the country. We have seen over the past month that they have been relatively quick in removing any measures when the situation improves, for example, the curfew was initially lifted in main tourist provinces and eventually in Bangkok and all over the country. In term of economic policies, farmers from the rice pledging scheme were immediately paid within a month, the Board of Investment (BOI) has been appointed and investment applications can now be reviewed and approved. Tax policies have also remained supportive. VAT has been maintained at 7% to support domestic consumption and to create pro business friendly environment; corporate income tax maintained at 20%. Crucially, the Fiscal Year 2015 Budget Act is expected to be in place in time at the beginning of next fiscal year (1st of October), this also includes a fiscal expansionary in the form of budget deficit of 250,000 million baht to stimulate the economy. The budget deficit only accounts for around 10% expenditures and is only half of what the law allows, therefore, there is plenty of room to boost the economy further if needed. NCPO has announced a 3 phase roadmap to return the country to its democratic path to hold elections by 2015. An interim charter is expected to be unveiled soon, this will allow for an appointment of the National Legislative Assembly, which be responsible for enacting legislation. The Prime Minister and cabinet is expected to be in place by September. In addition, the reform Council and Constitution drafting Committee will also be established. Once the reform an the constitution drafting process is complete, an election can be held.
Q : What is the rationale behind the issuance of Savings bond? Chularat : Savings bond has always been important part of PDMO annual issuance plan because it is the only instrument that reaches out to retail investors and encourages individuals to increase their level of savings. As some of the proceeds are used to finance government projects, they also offer the general public an opportunity to contribute to public financing and thereby create a sense of “ownership� in the process of economic and social advancement. Because savings bonds have a direct impact on the long-term financial well-being of general public, we have continued to attentively adjust and/or introduce new features to ensure that it best serves the interests of general public.
3
Q&A with Director-General For this particular savings bond to be issued in Q4 of FY2014, it is one of our longest maturities, at 7 and 10 years (last 10-year tenor was in 2002) with total amount of 30,000 million baht. The first lot will be exclusive to the elderly with age restrictions of 60 years and over while the 2nd and 3rd lots will be opened to all citizens. We hope that the relatively long maturities will encourage long-term savings providing future financial security for various age groups, from the elderly saving for the next generation to new graduates saving to build a family. We see this as a way to return sustainable happiness to the society. To ensure 24 hours nationwide access to savings bonds, I am pleased to inform the public that in addition to the usual channels to purchase savings bonds through our representatives; Krung Thai Bank, Bangkok Bank, Siam Commercial Bank and Kasikorn Bank (collectively, these 4 banks have up to 40,000 ATMs and 4,500 branches), the public can now invest in savings bonds via online banking with Krung Thai Bank.
“We see savings bond as a way to return sustainable happiness to the society”
Q : What can the PDMO play to support Thailand in ASEAN Economic Community (AEC) in 2015?
Chularat :
The key element for a truly integrated ASEAN Community is connectivity, and connectivity
can only be achieved by having sufficient infrastructure. However, the lack of significant investment in major transportation over the past decades means that Thailand has repeatedly passed up on opportunities to enhance our long-term competitiveness, to develop new growth centers nationwide and the level of our living standards. Moreover, as the heart of mainland South East Asia, this “missing link” in infrastructure has a wider regional consequence as it acts as an obstacle to ASEAN’s efforts to promote freer flow of goods, services and people across the boundaries. The government recognizes the importance of such investment. There are projects in various sectors including mass transit, duo-track railway, roads connecting ASEAN economic corridors, airports expansion and ports in the pipeline. The PDMO has a critical role to play by providing funding for these projects. The funding strategy must be formulated to meet the funding requirements without compromising our fiscal sustainability framework. Although these typical projects normally require large amount of investment through borrowings, I am confident that PDMO is in a strong position to meet these challenges. There is ample liquidity in the domestic bond market and more importantly new products that have continuously been developed enabling the PDMO to select most suitable instruments for project financing. For example, the amortized bond could be used to match cash flows of debt repayment and eventual return from project investment.
4
Q&A with Director-General In term of bond market cooperation, PDMO recognizes that for ASEAN to achieve sustainable and inclusive growth, there must be mutual support amongst member countries. Thus, all of us can grow together, and no one is left behind. In light of this spirit, PDMO has linked CGIF and Baht Bond issuance to the development of the bond market. This has allowed our close neighbor, Lao PDR to raise funds in our domestic market to fund their own infrastructure projects. Looking ahead, we hope to further expand cooperation in this area to promote the tightening of financial markets in the region which may lead to mechanisms to help protect AEC from the impact of global economic uncertainties.
Q : Given that you will be retiring at the end of September (making this your last booklet), what has been the highlight of your time as Director-General of PDMO?
Chularat :
It has been an honor for me to serve as the Director-General at PDMO as it is a position in
an organization where I can contribute directly in many important areas; some of which include strengthening of the domestic financial markets and support regional financial markets integration, investments in public sector projects that help strengthen the platform for sustainable growth as well as provide financial support to the public through SOEs and SFIs. In term of domestic bond market development, I am pleased that we have taken concrete steps to turn the page on SOEs bond issuance by adjusting our SOEs bond issuance to be in line with government benchmark bonds. For example, the GGLB that was launched, and future SOE bond issuance will now be sizeable, more predictable in order to encourage greater liquidity, establish benchmark yield for SOEs and eventually eliminate fragmented and small sized bonds. Given the volatilities in the financial market environment, we have continued our product development to include the extension of inflation linked bonds to 15 years, and also plans to lengthen further to 30 years. In light of the AEC in 2015, it was pleasing to see Lao PDR successfully raised funds in our market, through the CGIF and Baht Bond initiative, marking the first cross border fund raising of its kind. I believe that this provides a concrete reference for future cooperation between ASEAN members in areas of financial market integration. Finally, these achievements in market development would not have been possible without the commitment and cooperation from all stakeholders and market participants. I would like to take this opportunity to thank all of you and hope that we will cross paths again in the near future.
5
Retail Savings Bond Issue Size : Tenor : Sale Period : Coupon Rate : Maturity Date : Sales Channel :
4,000 THB Mil. 3 years 8 May – 29 August 2014 3.25% p.a. 8 May 2017 • Counters [all 4 appointed banks] - Krung Thai Bank - Kasikorn Bank - Siam Commercial Bank - Bangkok Bank
• ATM [all 4 appointed bank] • “Savings Bond Certificates” [ONLY at Kasikorn Bank]
“It’s just the small amount, but I want them to learn and start saving for their futures.” the father said.
PDMO Booth Opening Ceremony @ Money Expo 2014 on May 8th, 2014. (Fair visitors : over 1 million people) Ms. Chularat Suteethorn (Director-General of Public Debt Management Office) – [middle left] Mr. Ace Viboolcharern (Deputy Director-General of Public Debt Management office) – [left] Mr. Santi Viriyarungsarit (Editor of Money and Banking Magazine) – [middle right] Mr. Maytee Phanachet (Capital Markets Product Management Head of Kasikorn Bank) – [right]
Ms. Prechaya (Ice) leading actress from “ATM : Er Rak Error” @ PDMO Booth
6
NEW!!
Long-term Saving Bond Issue Size : Tenor : Sale Period :
30,000 THB Mil. 7 and 10 years 15 – 25 July 2014 Age Restriction : 60 years and over
15 – 16 July 2014
(max. purchase of 2 THB Mil./tenor/bank)
No Age Restriction
17 – 20 July 2014
(max. purchase of 2 THB Mil./tenor/bank)
No Age Restriction
21 – 25 July 2014
(No limitation)
Coupon Rate : Maturity Date : Sale Channel :
4.25% p.a. (7-year) 4.75% p.a. (10-year) 15 July 2021 and 15 July 2024 • Counters [all 4 appointed banks] - Krung Thai Bank - Kasikorn Bank - Siam Commercial Bank - Bangkok Bank • ATM [all 4 appointed banks] • “Savings Bond Certificates” [ONLY at Kasikorn Bank] • “Internet Banking” [ONLY at Krung Thai Bank]
Remarks : • For non-Thai citizens, only foreigners who obtain work permits are eligible. • Savings Bond Certificate is available for the purchase as a gift for other person.
7
Structure Shift… between Non-Resident and Retail Investor Holding in GOVT BOND THB Mil.
% Share of Government Bond
Non-Resident holding in Government Bond % Share of Government Bond Retail Investor holding in Government Bond % Share of Government Bond 29.1%
Savings Bond for FIDF
4%
Savings Bond for Deficit
15.7%
F E 1
8% 424,311MB
483,839MB 381,796MB
366,490MB
7.6%
255,675MB
129,174MB
Outstanding size
129,174MB 0.7%
39,577MB 31,577MB
(At the end of FY2014)
v v
25,000MB
-0-
Between FY 2002-2011 Average Savings Bond Outstanding is equivalent to 400,xxx THB Mil.
Savings Bond : The Safe Haven for Retail
08
09
10 11 Outstanding 12 13 (Current :
New Issuance Q4/2557 30,000 THB Mil.
266,572 THB Mil. , 11 Series)
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
A B C D
Today 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 2014
2015
FY2014 Expiration of 5 SB 137,398 THB Mil. (51%) FY2016 Expiration of 3 SB 89,597 THB Mil. (34%) FY2018 Expiration of 2 SB 8,000 THB Mil. (3%) FY2018 Expiration of 1 SB 31,577 THB Mil. (12%)
2016 2017 2017 2018 2018 2016
1. SBST147A 80,000 MB 2. SB148A
43,303 MB 78 MB
3. SB148B 4. SB149A
10,820 MB 3,197 MB
5. SB149B
4,000 MB
6. SB15NA
3,367 MB
7. SB165A 8. SBST166A
82,230 MB
B
9. SB16DA
4,000 MB
10. SB175A
4,000 MB
12. New Issuance Bond Tenors
C 31,577 MB
11. SB189A
8
A
12.1 SB217A 12.2 SB247A
Size ≤ 30,000 MB
D
2019
2020
2021 2021
2022
2023
2024 2024
Exclusivity
9
10
20,000
Re-open
Total (THB Mil.)
5,000
9,000
8,000
11,000
LB296A = Re-open LBA37DA = Re-open LB446A = Re-open LB616A =
ILB283A =
: 1. LB196A = LB236A =
Maturity Date
13-Jun-2019
Re-open
16-Jun-2023
3.625%
Re-open
12-Mar-2028
1.25%
22-Jun-2029
4.875%
(Re-open
12-Dec-2037
4.26%
29-Jun-2044
4.675%
17-Jun-2061
4.85%
126,000
3.875%
20,000
Coupon
21,000
25,000
20,000
Total
19,000
18,000
10,000
24-Sep-2014 10,000
-
8,000
5,000
15,000
9,000
17-Sep-2014
10-Sep-2014
3-Sep-2014
27-Aug-2014
20-Aug-2014
8,000
12,000
5,000
13,000
31,000
11,000
LB616A 50-yr
13-Aug-2014
12,000
LB446A 30-yr
-
15,000
5,000
13,000
25-yr
LBA37DA LBA37DA
6-Aug-2014
30-Jul-2014
23-Jul-2014
16-Jul-2014
10,000
LB296A 15-yr
10,000
15-yr
ILB283A ILB283A
Amortized Bond
9-Jul-2014
LB236A 10-yr
Government Bond Auction Schedule for Q4/FY2014
-
5-yr
LB196A LB196A
Inflation-Linked Bond
2-Jul-2014
Auction Date
Exclusivity MOF Outright PD Only
July
August
September
Thu 17th
Thu 24th
Thu 31st
Thu 7th
Thu 14th
Thu 21st
Wk 3
Wk 4
Wk 5
Wk 1
Wk 2
Wk 3
Thu 11th
Thu 18th
Wk 2
Wk 3
<2
2
BMTA TL 1,000*
EXAT B 900* EXAT TL 1,000*
Syndication
Syndication
SRT TL 4,864!*
GHB B 5,000
SRT B 4,000**
PWA B 700 PWA B 300*
4
MEA B 1,000
5
7
PEA B 2,000!
SRT B 2,000*
Total
Syndication
6
* Guaranteed by MOF ** Guaranteed and Responsible for by MOF
SRT TL 3,000**
3
NHA TL 3,000*
BAAC TL 13,244** BAAC TL 20,000**
SRT TL 4,000** SRT TL 4,700*
New Borrowing Refinance
Thu
Wk 1
4th
Thu 28th
Tue 26th
Thu 10th
Wk 2
Wk 4
Thu
3rd
Wk 1
Date 9
MEA B 1,000
PEA B 2,000!
SRT B 2,000*
10
SRT B 4,700**
11
PEA B 1,200!
PEA B 2,000!
12
13
14
! Pending Approval from Entity as Stipulate by Act.
8
Tenor (Years) 20
86,608
4,000
3,100
6,000
10,700
1,000
6,864
1,000
37,244
3,000
-
2,000
11,700
(THB Mil.)
Total
Subject to Change
PEA PEA B 1,000! B 1,000!
MEA B 1,000
15
SOE Bond & Term-Loan Auction Schedule Q4/FY2014
Example : SRT TL 4,000** = State Railway of Thailand Term Loan 4,000 THB Mil. (Guaranteed and Responsible for by MOF)
11
FY 2014
To Meet : Short Term Demand To Manage : Funding Risk
T-Bill Supply
Public Debt Management Office, Ministry of Finance
T-bill (Allocated Amount) Participated Amount (Excess Demand) Not Fully Allocated Spread [AAY - Yield (T-1)]
Million Baht 75,000
Basis Points 7.5 67,336
64,000
46,158 42,616
41,312
40,750
39,015
5.0
36,369
509
21,432 5,725 20,410
33,690 30,842
17,195
15,000
15,000 15,000 15,000 15,000
15,000 15,000 15,000
15,000 15,000 15,000 15,000
2.5
15,000MB
1843
0.6
0.6
0.4
24,215
19,188
19,085
20,000 20,000 20,000 15,000
20,000
25,000 24,491 25,000 19,275
25,000 25,000 25,000 25,000
27,135 25,000 25,000 25,000 14,006
T-1=- 0
28,397 27,707
24,918 24,487
10,994
1.3
32,423
30,703
30,443
15,000 15,000 15,000 15,000 15,000
25,250
25,000
31,884
28,997 28,614 26,817 25,903 23,663
20,000 20,000 18,157
30,522
29,500
15,000 15,000 15,000 15,000
32,956
31,612 26,960 25,648
20,000 20,000 20,000 20,000 20,000
36,250 32,562
0.0
0.0 -0.5
-0.5
-0.5
-0.8
-0.8
-1.0
-1.3
-1.6
-1.8
-25,000
-2.4
-2.9
-2.5 -2.9
-3.3
-3.7
-3.9 -4.2 -4.4 -4.6
-0.8
-2.5
-2.3
-2.5 -2.5
-3.3
-3.5
-1.0
-1.8
-2.0
-2.2
-2.3 -2.9 -3.0
-50,000
Less than 1 Month 40,000 MB
49,008
50,000
Q4/FY14
-3.0
-3.9 -4.3
-5.0
-4.6
-4.9
-5.2
-75,000
-7.5 Sep
SEP
12
Oct
OCT
Nov
Dec
NOV
Jan
DEC
Feb
JAN
Mar
Apr
FEB
May
MAR
Jun
July
APR
Aug
MAY
Sep
JUN
ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LI NKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIP LINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC D EBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PD DF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT B OND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKETDEVELOPM ENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATIO N-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DI SCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBI LC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOP MENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLAT ION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PU BILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONE ER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINET COMMMITM ENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMEN T OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATIO N BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVE LOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION IN FLATION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FI SCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMEN TS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND P IONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMM ITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGE MENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDI CATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATIO N INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BON D FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVE MENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED-BO ND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND ACHIEVEMENTS PUBIL C DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE13
B: Progress Update • Bond Switching : Source Bonds for H1/FY2015 • Toward ASEAN “Preferred Destination”
14
Bond Switching Schedule for Transaction in H1/FY2015 Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
•
The Public Debt Management Office (PDMO), Ministry of Finance, Kingdom of Thailand has mandated Bangkok Bank Public Company Limited, Kasikornbank Public Company Limited, and Standard Chartered Bank (Thai) Public Company Limited as Joint Lead Managers for Bond Switching and Bond Consolidation transaction.
•
The transaction is in the preparation stage and is expected to take place in the first half of fiscal year 2015 (H1 FY 2015). In addition to the numerous examples that have been studied, Knowledge Sharing sessions were completed between PDMO, the Swedish National Debt Office and the UK Debt Management Office to ensure the best execution plan.
•
PDMO and Joint Lead Managers are open to opinions from Primary Dealers and investors and look forward to a strong cooperation, which hopefully will deliver a success to Thailand’s first Bond Switching and Bond Consolidation transaction.
•
Source bonds – LB155A and LB15DA – have been identified.
•
Key terms and conditions, exchange approach and ratio, and the destination bonds are still under consideration and will be announced at a later date.
•
For more information please contact: Bangkok Bank PCL
Kasikornbank PCL
Mr. Montri Upathambhakul Tel: +66 (0) 2626 4434 Email: montri.upa@bbl.co.th
Standard Chartered Bank (Thai) PCL
Mr. Supong Ninsuvannakul Tel: +66 (0) 2470 3274 Email: supong.n@kasikornbank.com
Ms. Chanaichon Suwansirikul Tel: +66 (0) 2724 8836 Email: chanaichon.suwansirikul@sc.com
Source Bonds for Bond Switching in H1/FY2015 Public Debt Management Office, Ministry of Finance, Kingdom of Thailand THB Million
300,000
Thai Government Bond Maturity Profile 250,000
200,000
152,572 150,000
132,000
100,000
50,000
Source: ThaiBMA
10 11 12
13
14
15 16 17 18 19-23
24
LB616A
LB446A
9
LB416A
8
LB406A
7
LB396A
LB21DA
LB22NA LB233A LB236A
6
LBA37DA LB383A
LB213A LB214A ILB217A
5
LB326A
LB19DA
4
LB316A
LB191A LB193A LB196A LB198A
3
LB296A
LB17OA LB183A LB183B
2
LB27DA ILB283A LB283A
LB16NA LB171A LB175A LB176A
1
LB25DA LB267A
LB15DA LBF165A LB167A
0
LB244A
LBF14NA LB14DA LB155A LB157A
TTM
LB24DA
Series
LBF147A LBF149A
0
25 26 27 28-29 30 31-46 47
End of June 2014
15
Linking CGIF & BAHT BOND to the Development of Bond Market Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
10,000
Total Outstanding THB 9,231,107 BB
CGIF
9,000 8,000 7,000
5,000
2,850
4,000
Baht Bond
Inaugural (Noble, Hong Kong)
6,000
BAHT BOND
End of June 2014 (Foreign Issuers Bond)
(For Asian Bond 0.03% CGIF Market Initiative)
THB mln.
1,000
THB mln.
Updated: In 2013, Laotian Government issued 1.5 billion baht of 3-year baht bonds, with 4.5%of interest rate
3,000 2,000
94,284
Inaugural (Lao PDR)
1%
Corp Bond
22%
SOEs Bond
8%
0
2013 2014 2015 2016 2017 2018 2019 2020
Natural Hedging
BOT Bond
Inv’t Grade
2007 2008
2009 2010 2011 2012 2013 2014 IBRD
111111
2005 2006
KEXIM (30,700 m)
31%
Hana (18,000 m)
CABEI
Woori (13,000 m)
Targeted Industry
GOVT Bond
ING
38%
IBK
(10,000 m)
ADB (10,500 m)
Citi
(12,300 m)
(11,553 m)
Why now?
What next?
Thailand (PDMO) is a Board member Set criteria Select corporate
Toward becoming regional hub Increasing AAA Supply Broadening Issuer Base : Lao PDR
(PDDF.)
Timeline For Baht Bond Application Process
Approval
Nov
Dec
SUBMISSION
CONSIDERATION
Jan
Feb
1
1st
2nd
Progress Report
Progress Report
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
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
APPLICATION PROCESS: 3 rounds per year (9-mth issuance period for each round)
16
Dec
CONSIDERATION
1
Issuance Period 9 months (Jan - Sep)
94,284 THB Mil.
THE OUTSTANDING BAHT BOND Classified by issuers based on TTM
56% Due within Y2015 THB mln.
40,000
Ha
9%
(64,590 THB Mil.)
32%
IBK
(8,350 THB Mil.)
(36,690)
KE
Wo
18
%
35,000
24%
30,000
38%
CA
CA-CIB
19%
Woori
(22,409)
CA
73%
(27,900)
(22,190)
25,000
AF
(17,134 THB Mil.)
CB
Cit
(68,800 THB Mil.)
ING
AD
KEXIM
20,000
Lao
No
15,000
-
10,000
KEXIM
IBK
8% (9,066)
3% (3,874)
5,000
(5,000)
2%
(3,000)
Hana
Hana
4%
3%
2%
1%
(2,235)
(1,500)
2021
2022
2%
(2,800)
(2,000)
0
2014
2015
L1
2016
L2
2017
2018
L3
2019
2020
IFIs & ABMI
Korean Issuers
2023
2024
2025
Completely Due
Others
(End of June, 2014)
Source: PDMO End of June, 2014
Broadening Issuer’s “Qualification” to achieve “ASEAN Chosen Destination” Twin Inaugural 2004
IFIs
2005
2006
ADB JBIC
II
2007
2008
2011
2012
2013
2014
2015
…
2020
IBRD
ADB
CITI
KfW
ADF
IIIIIIIIIIIIIIIIIIII
KEXIM KDB
Hana CITI
Hana
IBK Woori KEXIM
KEXIM IBK
Woori
-0-
Issuer’s Government Guarantee
LAOS I I
CGIF
AAA
2010
KEXIM
Credit Rating
SPV
2009
?
NOBLE
Possible Next Step End of June, 2014
COPORATE BOND MARKET CLASSIFICATION
BY CREDIT RATING
400,000
BY TTM
300,000
AAA
AA
A
BBB
Non rate
BY SECTOR
200,000
150,000
0
400,000
0
0
1
2
3
4
5
6
7
8
9 10 >10
Energ Bank Prop ConMat Fin Food Comm Trans ICT Petro Agri SPV Helth Paper Auto Tourism Media Etron
800,000
17
ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LI NKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIP LINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC D EBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PD DF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT B OND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKETDEVELOPM ENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATIO N-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DI SCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBI LC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOP MENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLAT ION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PU BILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONE ER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINET COMMMITM ENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMEN T OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATIO N BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVE LOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION IN FLATION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FI SCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMEN TS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND P IONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMM ITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGE MENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDI CATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATIO N INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BON D FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVE MENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED-BO ND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND ACHIEVEMENTS PUBIL C DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF 18 FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE
C: Basic & Essentials • Public Debt Outstanding and Its Composition (As of April 2014) •
= 5,583,828 THB Mil (46.6% of GDP) Bond Market Capitalization and Its Composition (As of June 2014) = 9,212,880 THB Mil. (77.1% of GDP)
• Total GOVT Bond Supply Issuing in FY2014 • GOVT Bond Auction Result in First three Quarters of FY2014 • Non-Resident Holding in Domestic Bond
NR Holding in THB Bond (As of June 2014)
= 667,023 THB Mil. (GOVT Bond : 544,244 THB Mil., BOT Bond : 122,065 THB Mil., Corp Bond : 734 THB Mil.)
Net Change in NR Holding (January - June 2014)
= -40,339 THB Mil.
(GOVT Bond : Net Sell -51,617 THB Mil., BOT Bond : Net Buy +11,278 THB Mil.)
19
Public debt Outstanding (as of April 2014) = 5.58 THB Trillion (46.6% of GDP) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Components of Public Debt
Unit : THB Mil.
1. Government Debt (excluded FIDF)
2,858,831*
2. Government Debt (for FIDF)
1,098,554
3. Non-Financial State Enterprise Debt
1,088,383
4. Special Financial Institutions Guaranteed Debt
Special Financial Institutions
532,210
5. Autonomous Agency Debt
Guaranteed Debt
Autonomous Agency Debt
9.5%
0.006 THB Trillion
0.1%
0.53 THB Trillion
5,850
Public Debt Outstanding
5,583,828
*including 73,201 THB Mil. Of External Debt
Non-Financial Sate Enterprise Debt
GOVT Debt 51.2%
19.5% 1.09 THB Trillion
2.86 THB Trillion
GOVT Debt (for FIDF)
19.7
% 1.10 THB Trillion
Source : Information Technology Centre, PDMO
Public debt projection will be in line with fiscal sustainability framework and less than 50% of GDP
Forecast Public Debt to GDP % of GDP 70% 61.7%
60.6%
60.9%
60%
SustainabilityFramework Framework Sustainability Public Debt to GDP < 60% Public Debt to GDP < 60% 56.9% 52.2%
50%
40%
50.6%
48.3%
51.0%
45.5%
45.2% 43.5%
41.7%
39.6%
35.6%
42.6%
45.86%
37.3%
Balance Budget
30%
20%
10%
14.6% 9.1%
10.9%
12.5%
11.5%
12.6%
11.3% 10.2%
4.8%
10.0%
7.4%
2014f 2015f 2016f 2017f 2018f 2019f 2020f
0% FY
Public Debt to GDP
Repayment Budget/Budget Expenditure
Source: Policy and Planning Bureau, as of 27 June 2014, Public Debt Management Office, Ministry of Finance
20
Average-Time-to-Maturity (ATM) = 8yrs 3mths Average Cost = 4.1% Fixed : Floating = 88 : 12
Total Domestic GOVT Debt = 3.88 THB Trillion (include FIDF)
As of April 2014
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand Assumptions : 6 months BIBOR = 2.3%, 6 months Fixed Deposit Rate = 1.4%, Inflation = 2.5%
FIDF 1 128,000
300,000
GOVT Debt (for FIDF) = 1,098,554 THB Mil. 101,850
35,000 14,000
............. On-lending Loan
Water Decree
22,000 13,858
Maturity Profile
41%
27,800
29,800
95,936 20,000
84,000
5,500
6,500
41,900
33,581 35,000
2,200
.............
TTM Fiscal Year
10 yrs + 104,205
Next 5 yrs 6-10 yrs
15,700 77,000
47,000
43,000
32,500
184,110
18,900 80,025
100,872
33%
201,890
313,994 5,267
115,830
= 8%
26%
123,704
10,000
TKK
ATM = 9yrs 8mths Avg. Cost = 4.1% Fixed : Floating = 89: 11
GOVT Direct Debt (exclude FIDF) = 2,785,631* THB Mil.
10,250
86,630
T-Bill
.............
Callable
16,000
58,247
164,297
242,222
277,644
-
15,269
Budget Deficit
100,000
Maturity Profile
60%
Next 5 yrs 6-10 yrs 10 yrs +
Fiscal Year
200,000
= 4yrs 7mths = 4.1% = 85: 15 = 13%
5%
TTM
300,000
ATM Avg. Cost Fixed : Floating Callable
35%
55,000
101,800
37,900 40,000 69,000
-
13,000 64,124 58,440 27,105 39,836 67,537 141,963 29,000 75,000
200,000
100,000
FIDF 3
.............
*Excluding 73,201 THB Mil. of Foreign Debt
(1) (2) (3) (4)
Well-Developed Bond Market Improved
GOV’T Direct Debt (exclude FIDF) Profile Dramatically
ATM Lengthened Cost Lowered Well-Balanced Fixed-Float Ratio Well-Distributed Maturity Profile
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Note : Government Direct Debt = 2.8 THB Million (exclude FIDF)
As of Dec 2007
As of April 2014 ATM
Average-Time-to-Maturity LENGTHENED by 5 yrs
9yrs 8mths ATM
5yrs 3mths Avg. cost
Avg. Cost LOWERED by 40 bps.
4.5%
(While ATM Lengthened by 5 yrs)
Avg. cost
4.1% Floating
Well-Balanced Fixed/Floating Ratio (Target : Fixed/Float ratio = 80 : 20)
10%
Fixed
Fixed
90%
89%
54% 28% 18%
Well-Distributed Maturity Profile (Maturing Debt in the next 5 yrs is less than 50% of Total Debt) next 5 yrs
Floating
year 6 - 10
10yrs +
41%
next 5 yrs
11%
26% 33% year 6 - 10
10yrs +
21
ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LI NKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIP LINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC D EBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PD DF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT B OND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKETDEVELOPM ENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATIO N-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DI SCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBI LC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE NCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOP MENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLAT ION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PU BILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONE ER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINET COMMMITM ENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMEN T OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATIO N BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVE LOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION IN FLATION-LINKED-BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FI SCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMEN TS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND P IONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMM ITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGE MENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDI CATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATIO N INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BON D FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVE MENTS PUBILC DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED-BO ND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND ACHIEVEMENTS PUBIL C DEBT MANAGEMENT OFFICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BENCHMARK BOND FISCAL DISCIPLINE COMMITMENT BOND MARKET DEVELOPMENT ACHIEVEMENTS PUBILC DEBT MANAGEMENT OF 22 FICE INNOVATION INFLATION-LINKED BOND PIONEER PDDF CGIF DEDICATION BE23
Full Capacity* of All Government Funding Instruments
1,150,000 THB Mil. per Year ($35 Bil.)**
* Under favorable market liquidity + using All funding instruments
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
% 5.50 5.25 5.00
LB 3 yrs LB 5 yrs LB 7 yrs LB 10 yrs LB 15 yrs LB 20 yrs LB 30 yrs LB 50 yrs
150,000 THB Mil. 120,000 THB Mil. 80,000 THB Mil. 80,000 THB Mil. 60,000 THB Mil. 60,000 THB Mil. 30,000 THB Mil. 20,000 THB Mil.
($4.6 Bil.)** ($4.0 Bil.) ($2.4 Bil.) ($2.4 Bil.) ($1.8 Bil.) ($1.8 Bil.) ($0.9 Bil.) ($0.6 Bil.)
Thailand’s Loan Bonds (LBs) weighting in international indices
GBI-EM Global JP Morgan
iBoxx Asia ex Japan Markit
7.0%
Asian Local Markets HSBC
7.8%
7.6%
Benchmark Bond
Last Update : June 2014
4.75 4.50 4.25
20
4.00
15 10
3.75
7
3.50 3.25
The “Missing Composition” of Leader role in the Bond Market Government Funding Instruments
5
3.00
Infrastructure
2.75 2.50
50
30
liquidity
3
Benchmark Bond
2.25
($20.4 Bil.) ($3.5 Bil.) ($3.5 Bil.) ($2.8 Bil.)
Benchmark Bond
~600,000THB Mil. (52%)
Savings Bond
~100,000THB Mil. (8%)
Amortized Bond
~100,000THB Mil (8%)
Inflation-Linked Bond
~80,000THB Mil. (7%)
($1.4 Bil.) ($1.0 Bil.) ($7.0 Bil.)
Promissory Note
~40,000THB Mil. (4%)
Floating Rate Bond Bank Loan
($40 Bil.) Total
~30,000THB Mil. (3%) ~200,000THB Mil. (18%)
1,150,000 THB Mil. (100%)
2.00
TTM
3 5 7
10
15
Source: ThaiBMA Government Bond Yield Curve (End of June 2014)
20
30
50 **Source: BOT Exchange rate (End of June 2014)
23
Bond Market Cap. = 9.2 THB Trillion ($230 Bil.)*
GOVT Bond = 3.5 THB Trillion ($113 Bil.)*
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
% Share of GDP
Domestic Bond Market Classified by Issuer
140% 128% 120% 100%
106%
Baht Bond
104%
CGIF Market Initiative)
(For Asian Bond
0.03%
Corp Bond
22%
SOEs Bond
8%
BOT Bond
31%
80%
1%
77%
60%
40%
24%
Asian Fin. Crisis
20%
Bond Market / GDP
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Equity/GDP
2014 Mar 2014 June
Bank Loan /GDP
1999
1998
1996
1995
1994
1993
1992
1997
12%
0%
2,824,108 THB Mil.
Maturity Profile BOT vs GOVT Bond BOT ATM = 8mths GOVT ATM = 8yrs 4mth
15%
BOT
20% 29%
18%
22%
26%
≤1
1<yr≤3
3<yr≤5
5<yr≤10
10<yr≤50
71%
24
*End of June 2014
GOVT Bond 38% 3,472,670 THB Mil. *Source: BOT Exchange rate (End of June 2014)
End of June 2014
FY2007 – FY2014
Innovation of GOVT Debt Securities Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
• Lengthen average-time-to-maturity of Total Government Debt Portfolio • Meet Long-term investors’ demand
Floating Rate Bond
• Increase floating debt ratio of Total Government Debt Portfolio • 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 Benchmark Bond
• Combat low interest rate + Lengthen average time-to-maturity • 4th country in the world (1st : UK 2nd : France 3rd : China)
10-yr Inflation-Linked Bond (ILB)
• Strong anti-inflationary signal • Deepen the Development of the Bond market • 1st country in Emerging Asian Economies
Electronic Retail Savings Bond
• Lower Minimum Amount to Purchase / Offer throughout the year • Develop the retail bond into an electronic form Scripless System • Can be purchased via ATM, in addition of Bank Retail Branches
Amortized 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
FY 2012-2014
FY 2011
FY 2007-10
30-yr Benchmark Bond
Bond Switching & Consolidation
• Allow both issuer and investors to improve their portfolio • Larger outstanding size + Less bond series Enhance liquidity in the secondary market
PDDF Activated
Upgrade PD Privileges
(Public Debt Restructuring and Domestic Bond Market Development Fund)
15-yr ILB
CGIF Activated
Baht Bond
(Credit Guarantee and Investment Facility)
Equilibrium of Domestic Bond Market Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Issuers
• 77 percent of Thailand’s debt securities are issued by Government, Bank of Thailand and State-Owned Enterprises
Credit Rating
• 97 percent of Thailand’s debt securities are classified as Investment Grade
Investors
• Thailand’s government debt securities are held by a wide group of investor types
Domestic Bond Market (Classified by Issuers)
Domestic Bond Market (Classified by Credit Rating) Non-rated BBB 4% 2%
Baht Bond
CGIF 0.03%
1% A
Corp Bond
8%
22%
AA 4%
Government
Government
38%
SOEs
8%
Government Debt Securities (Classified by Types of Investors)
38% SOEs 8%
BOT
BOT
31%
31%
Total of 9.2 THB Trillion
Source : ThaiBMA (End of June 2014)
Total of 9.2 THB Trillion
Source : ThaiBMA (End of June 2014)
NR 17% 16 Household and Non-profit
BOT BOT 66%% Insurance and Other Corporation
36% 39
8% Depository Depository Corporation Corporation
3133 % % Total of 3.3 THB Trillion
Source : BOT (End of May 2014)
25
FY2008-FY2013 Key Success Indicators
1. 1. Trading Volume 2. Turnover Ratio 3. 3. Demand Concentration 4. Auction Price Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Benchmark Bond 5 yrs and Below : Highest secondary trading volume in every year Unit: % Share of Market Trading Volume
5-yr Benchmark Bondâ&#x20AC;&#x2122;s Higher Turnover Ratio : Even the higher outstanding size, turnover ratio is still more than 2 times Unit: Times
LB155A LB133A
9
29%
28%
27% 20%
LB145B
20%
7%
1.5
4.2
2.8
2.4
LB196A
2.9
Top 10 GOVT Bond Series : Accounted for 90% of all GOVT bond trading volume in secondary market
Well-Developed Benchmark Bond Pays Off : Even with greater size of issuance, the cost of funding is still at market rate
Unit: % Share of Secondary Trading Volume
Unit: USD Bil. +0.9 bps
90% 90%
+3.2 bps
84% 75%
76%
77%
80%
+1.4 bps +1.2 bps
14.7
12.8
16.5
15.9
13.7
7.5 -0.4 bps
To be Updated
26
LB15DA
3.1
LB133A
21%
4.2
LB176A
-0.2 bps
Tier 1 > 100,000 THB Mil. in Size (90% of Trading Volume)
(3,008,XXX THB Mil.)
Tier 2 > 50,000 THB Mil. in Size
(End of June 2014)
(8% of Trading Volume)
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Tier 1: >100,000MB
THB Mil.
FY2014 Q3 Market Share of Trading Volume in Secondary Market Tier 2 Tier 1
(8 Series)
300,000
5
Outstanding size (THB Mil.)
250,000
90% 0
9%
50
1%
100
200,000
10
Tier 2: 50,000 – 100,000MB 0% (15 Series)
20%
40%
60%
80%
100%
150,000
50
LBA 25
100,000 100,000
15
ILB 15
50,000
LB267A LB24DA LB191A LB14DA LB175A LB25DA LB316A LB171A LB214A LB19DA LB157A LB446A LB446A LB244A LB22NA LB183A LB406A LB396A LB383A
LB416A LBA37DA LBA37DA LB183B LB296A LB296A LB17OA LB27DA ILB283A ILB283A LB193A LB213A LB326A LB283A LB16NA LB198A LB167A LB233A
LB196A LB196A LB176A LB21DA LB236A LB236A LB155A LB15DA LB616A LB616A ILB217A
0
30
FY 2014 on-the-run Benchmark Bond FY 2014 on-the-run Innovative Bond
Source : ThaiBMA
Well-Distributed Bond Maturity Profile
The outstanding size of loan bond maturing in the next 5 years is 1,334,978 THB Mil. (44% of Total GOVT Bond)
(End of June 2014)
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
THB Mil. 300,000
Current Outstanding Current Outstanding Current Outstanding
5
≥ THB 100 Bil. = THB 50-100 Bil. ≤ THB 50 Bil.
FY 2014 on-the-run Benchmark Bond FY 2014 on-the-run Innovative Bond
250,000
200,000
10 150,000
50
LBA 100,000 100,000
ILB 15
25
15 50,000
30
1 Source : ThaiBMA
2
3
4
5
6 – 10 years
LB616A LB616A
LB244A LB24DA LB25DA LB267A LB27DA ILB283A ILB283A LB283A LB296A LB316A LB326A LBA37DA LB383A LB396A LB406A LB416A LB446A
LB196A LB198A LB19DA LB213A LB214A ILB217A LB21DA LB22NA LB233A LB236A
TTM LB14DA LB155A LB157A LB15DA LB167A LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A
LB21DA LB176A
Total GOVT Bond = 43 Series
11 – 50 years
27
FY 2014
756,xxx THB Mil.
Total Fund Raising Plan Announced in September 2013
New Borrowing
Public Debt Management Office, Ministry of Finance, Kingdom of Thailand
Savings Bond and Others
Deficit
170,124
610,124
250,000
THB Mil.
Benchmark Bond Roll Over
440,000 Rollover
Loan Bond : 5-10-15-30–50-yrs Inflation-Linked Bond : ILB 15-yrs Amortized Bond : LBA 25-yrs
360,124
By Bills
By Instruments
Keep our word… to get investors confidence for the plan Unit : Million Baht Lower-than-expected disbursement of Water Decree
Lower-than-expected disbursement of Water Decree
Economic Recovery
756,xxx MB Higher-than-expected revenue collection
Stimulus package to ease: US financial crisis
A -6% 0%
+5%
-3%
70%
+2%
Plan Actual
(as of Jun,14)
Plan Actual
Plan Actual
Plan Actual
Plan: Actual:
Announced Government’s funding need at PDMO’s Annual Market Dialogues in September Actual fund raising at the end of fiscal year (calculated from announced auction)
--------------
The difference between ‘’the announced’’ and ‘’the actual’’ supply of benchmark bond (% share)
Plan
Actual
Plan Actual
Benchmark Instruments are Benchmark Bonds : Standard Loan Bond (LB) tenors 5-10-15-30-50yr (in FY 2014) + Innovative Products : Inflation-linked Bond (ILB) + Amortized Bond (LBA) Regular issuance/ Consultation with PDs/ Pre-announced auction table
Other Instruments : Saving Bond, Floating Rate Bond, Promissory Notes, Bills and Bank Loan
28
FY 2014 Government Bond Auction Result
GOVT Bond Auction is decoupled from political situation
Classified by Quarterly Auction Schedule
Public Debt Management Office, Ministry of Finance
red
13
Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Inflation-linked Bond Amortized Bond Participated Amount (Excess Demand) Not Fully Allocated or Subscribed Spread [AAY - Yield (T-1)]
Million Baht
PM Dismissal
Dissolution of the parliament 9th December 2013
7th May 2014
Q1
Q2
Basis Points
Q3 22sd May 2014 Coup d‘Etat
T-1= 0 LB5y
LB15y LB50y LB10y LB30y ILB15y LB5y LB50y LBA25y
LB15y LB10y LB30y ILB15y LB15y LB5y LB50y LBA25y LB10y LB30y
FY 2014 GOVT Bond Auction Results Classified by Tenor
A B
LB5y ILB15y LB15y LB50y LBA25y LB30y LB10y LB5y LB50y
Most of Benchmark Bond : Fully Allocated 30-to-50-yr Benchmark Bond : Avg.Accepted LOWER than Market Price Public Debt Management Office, Ministry of Finance
Million Baht
Benchmark Bond 5 – 10yr
25,000
10yr
5yr
Bps
Benchmark Bond 15 – 50yr
15yr
30yr
15.0
50yr
(Exclusivity)
A Fully Allocated
12,500
7.5 309
3.9
3,466
3.2
2.9
2.7 1.8
T-1=- 0
20,000 20,000 20,000 20,000 20,000
-2.4
-0.4 -1.2
13,000 12,000 16,000 16,000
-0.2
7,000 10,000 10,000 6,534
5,000
9,000
9,000
9,000
5,000
8,000
9,000
9,000
8,691
-2.2 -0.8
-3.7
B
0.0
-3.4
-6.1
-7.0 -7.8
-12,500
-8.9
-8.1
-8.3
-7.5
-9.6 -11.4
-15.0
-25,000
-15.0
29
Annual Capital Flow classified by GOVT & BOT Bond (2007 – 2014)
2014 (Jan – June) GOVT Bond & BOT Bond = -40,339 THB Mil.
THB Mil.
Non-resident Net Buy/Sell in BOT Bond Non-resident Net Buy/Sell in GOVT Bond
BOT GOV
-40,339 THB Mil.
BOT
GOVT
BOT Bond
0
+11,278 THB Mil. THB Mil. THB Mil.
GOVT Bond
-51,617 THB Mil. 2014 YTD (End of June, 2014)
End of June, 2014
2014 Capital Flow (Weekly accumulated) In GOVT Bond & BOT Bond
GOVT : -51,617 THB Mil. BOT : -11,278 THB Mil.
THB Mil.
T
BOT Bond -11,278 THB Mil.
0 GOVT Bond -51,617 THB Mil
.
2014 30
End of June, 2014
Peers Comparison
Non-Resident Holding in Thai GOVT Bond is 544,224 THB Mil. or 15.7% of Total GOVT Bond Outstanding Relatively “moderate” share of NR holding by region average
Percentage share of Non-resident Holding in Local Government Bond (Mar 2008 - Present)
Indonesia
32.5% Dec’ 14
Malaysia 29.4% Dec’ 13 Peak @ 19.1% (Apr’ 13)
Thailand
15.7%
As of 27th Jun’ 14
Korea 9.2% Dec’13
Japan 8.0% Dec’ 13
1.5% (27,474 THB Mil.)
2008
2009
2010
2012
2011
2013
2014
Source : AsianBondsOnline, ThaiBMA
2014
Outstanding
End of June, 2014
Non-Resident Holding in THB Bond = 667,023 THB Mil. (7.2% of Thai Bond Market Capitalization)
(% share of Bond Market)
Thai Bond Market Cap. = 9,231,107
THB Mil.
Baht Bond (Foreign Issuers Bond)
1%
(For Asian Bond 0.03% CGIF Market Initiative)
GOVT Bond GOVT Bond
574,063 544,224
BOT Bond Bond BOT
118,177 122,065
SOE Bond Bond SOE
00
734 666
6.24% 5.9% 1.390% 1.28% 1.3% 1.28 0.00% 0.0% 0.01 0.0% 0.01%
667,023
7.53% 7.2%
Corp Bond Corp Bond
Corp Bond
22%
TOTAL TOTAL
692,906
GOVT Bond Outstanding SOEs Bond
3,472,670
8%
31%
BOT Bond Outstanding 2,824,108
THB Mil.
Non-Resident 544,224 THB Mil.
BOT Bond
% of Thai Thai Bond Bond Market Market Cap. % Share of (9,202,573THB THBMillion) Million) (9,231,107
Non-Res i dent Hol di ng Non-Resident Holding (THB Mi l l i on) (THB Million)
Issuer Issuer
Classified by Issuer (End of June 2014)
THB Mil.
Non-Resident 122,065 THB Mil. %
%
2,824,108 THB Mil.
GOVT Bond
38%
3,472,670 THB Mil.
Domestic Investors 2,928,446 THB Mil.
84.3
%
Domestic Investors 2,702,043 THB Mil.
95.7
%
th June, End As of of 6June, 2014 2014
31
Mission
Transparency, Discipline, Trustworthiness, Driving Social and Economic Development
Values
Professional in public debt management for sustainable development
Vision
Pro-active Debt Management
Develop Domestic Bond Market to be a Sustainable Source of Funding for the Stability of Thailandâ&#x20AC;&#x2122;s Financial System
Foster Strong and Effective Organization
3 PDMOâ&#x20AC;&#x2122;s Strategies
Formulate sound public debt management policies and strategies as well as conduct, monitor and evaluate public debt management operations under the relevant legal framework and guidelines
Source: Public Sector Development Group, PDMO
32
Teeralak Sangsnit
Executive Director
Wisut Chanmanee
Executive Director
Kittiya Chaithep
Economist
Kasirat Suwanpen
Phimonphan Tanwattana
Economist
Nattakarn Boonsri, Director
Acting Executive Director
Pimpen Ladpli
Bond Market Development Bureau
Chakrit Phothisuk
Economist
Wanthanee Phongam
Economist
Fund Management and Bond Market Infrastructure Development Division Paroche Hutachareon, Acting Director
Pimpen Ladpli, Senior Expert
Government Bond Market Development Division
Economist
Executive Director
Policy and Planning Bureau Executive Director
Chotika Uesampantakit
Economist
Laksika Tengpratip
Fiscal Analyst
Puttipong Kanna
Economist
International Bond Market Policy Division Nakarin Prompat, Acting Director
Jindarat Viriyataveekul
Executive Director
Water Management Project Financing Bureau
Theeraj Athanavanich
Public Infrastructure Project Financing Bureau
Ace Viboolcharern
Deputy Director General
Chularat Suteethorn
Director General
Deputy Director General
Bond Market Development
Debt Management Bureau 2
Suwit Rojanavanich
Bond Market Advisor
Debt Management Bureau 1
33
Front Office Middle Office Back Office Support Office
Secretary
Sirasa Kanpittaya
Office of the Secretary
Chanikarn Chaiyasena
Economist
Kasirat Suwanpen
Economist
Phothirat Kitsriopak
Economist
Sophida Sritomya, Director
Financial Product Development Division
Executive Director
Payment Administration Bureau
Information Technology Center
Legal Advisory Group
Public Sector Development Group
Internal Audit Group
Thavee Aisoonpisarnsiri
Acting Public Debt Advisor
Chularat Suteethorn Director-General, Public Debt Management Office Suwit Rojanavanich Bond Market Advisor
Bond Market Development Bureau, Public Debt Management Office Ministry of Finance, Kingdom of Thailand
For Further Information : Pimpen Ladpli
+66 2271 7999 ext. 5888
pimpen@pdmo.go.th
Senior Expert on Bond Market Development Acting Executive Director of Bond Market Development Bureau
Nattakarn Boonsri
+66 2271 7999 ext. 5803
nattakarn@pdmo.go.th
Director of Government Bond Market Development Division
Sophida Sritomya
+66 2271 7999 ext. 5804
sophida@pdmo.go.th
Director of Financial Product Development Division
Paroche Hutachareon
+66 2271 7999 ext. 5820
paroche@pdmo.go.th
Acting Director of Fund Management and Bond Market Infrastructure Development Division
Nakarin Prompat
+66 2271 7999 ext. 5812
Acting Director of International Bond Market Policy Division
ŕš&#x2021; ŕ¸&#x2019;
nakarin@pdmo.go.th