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Thursday, 21 March 2019

Thailand Bond House

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Siam Commercial Bank broadened its client base and won a series of coveted sole mandates in 2016, regaining the top spot in Thailand’s local bond market in a record year.

In the period under review, SCB arranged 47 issues for a combined underwriting value of Bt125.5bn (US$3.5bn), taking a 17.2% share of the primary market and outranking its nearest rival by two percentage points.

Its jump from fourth spot the previous year was all the more remarkable as Thailand’s local currency bond market was heading for a record 2016, with total issuance of an estimated Bt700bn.

SCB also had to reckon without state oil giant PTT, a regular issuer and a longstanding client. PTT’s absence from the market last year gave the bank an added incentive to diversify its business, and SCB proved it could do just that, winning sole mandates from significant first-time issuers such as Bangkok Expressway and Metro (BEM) and Energy Absolute.

SCB provided BEM with an alternative to bank loans when it was looking to extend maturities to match its core business. As sole bookrunner, SCB brought in Bt15bn from a broad base of institutional and high-net-worth investors for BEM’s debut issue and, in the process, locked in lower funding costs for the issuer. For renewable power producer Energy Absolute, SCB raised Bt8bn across three tranches in July.

SCB’s list of mandates during the period under review reflected its expertise in meeting each issuer’s unique requirements. Clients trusted it to deliver solutions, while investors had confidence in the bank’s ability to price deals appropriately and provide liquidity in the secondary market.

SCB prides itself on going the extra mile for its clients. For CP All, another frequent issuer, the bank continued to monitor the markets and seized an opportunity with a Bt12bn placement of senior bonds in August, helping refinance part of the retailer’s Bt173bn of outstanding bonds.

SCB saw a window for the company in August and was alone in recommending a potential deal, thus winning a sole mandate for an initial target of Bt5bn–Bt6bn based on positive investor feedback. Ultimately, the size was doubled to Bt12bn after an overwhelming response, and SCB succeeded in tightening final pricing, further sweetening the deal for CP All.

The ability to deliver deals continues to reap rewards for the bank. BEM awarded SCB another sole mandate in October for a Bt8bn triple-trancher, while CP All has accepted SCB’s proposal for a sole mandate to manage a public offering of perpetual notes that will ease pressure on the company’s leverage ratios, thereby helping it to defend its credit rating.

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