Kasikornbank stood out from the pack in a busy year for Thailand’s primary debt markets in 2015 with new structures and innovative solutions for its clients.
The race to the top of the league table was one of the tightest on record, with only a 3.3% difference in volumes separating the top four arrangers. However, Kasikornbank pulled away from the rest of the pack in pushing fresh ideas and structures to resolve the specific needs of its clients.
Among Kasikornbank’s major accomplishments was the introduction of a new guarantee structure with the launch of a partially guaranteed issue on a sole lead basis for mobile phone operator True.
True wanted to extend its yield curve beyond five years, but faced limitations from its BBB+ rating. Typically, institutional investors require a Single A grade at least, while retail buyers shun longer tenors.
The solution was a partial Kasikornbank guarantee, which gave the rating on the bonds a one-notch boost to A–. Under the structure, bondholders will have recourse to Kasikornbank for 45% of the principal amount if True defaults. The guarantee reflects the bank’s full confidence in the financial health of the issuer, which had been recently recapitalised after China Mobile became a new shareholder.
The structure allowed True to push tenors to seven years and, for the first time, True was able to tap institutional investors, thereby expanding its investor base and achieving cheaper funding costs.
A more notable landmark offering was the first rated bond for the Lao People’s Democratic Republic. Kasikornbank had pushed hard for the sovereign to be rated, and the approach was justified when Laos was able to extend its investor base to include insurance companies and asset managers.
The newly rated deal was popular, with a 1.25x oversubscription, while Kasikornbank’s work reaped rewards with a follow-on mandate for another potential offering from the government in the near future.
The skills to sell in challenging market conditions are also critical to a successful deal, and Kasikornbank proved its ability in this area in December 2014, when Thai Airways needed to raise a chunky Bt10bn. The airline was suffering from huge losses and the chief executive officer’s seat was vacant at that time. As sole underwriter, Kasikornbank tapped its 1,000-branch network to sell the public offering.
The bank’s services to its clients go beyond primary issuance to the secondary markets. It is ranked among the top two dealers, according to data from the Thai Market Bond Association, providing critical liquidity for investors that depend on flexible entries and exits.
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