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Friday, 16 November 2018

Thailand Bond House

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Bangkok Bank edged ahead of its rivals in 2017, maintaining its reputation for quality while introducing new products to a hungry Thai investor base.

Competition among the Thai banks in the baht bond market was intense over the past 12 months, with the top four underwriters separated by less than one percentage point of market share during IFR’s review period, according to Thomson Reuters league tables. Bangkok Bank nosed ahead in 2017, however, with a broad book of business that included some innovative deals.

The Thai bank is widely known for its conservative approach as a bookrunner, and that held it in good stead in 2017 as it avoided the fallout from recent defaults in the baht market. With that policy as an anchor, it notched up its activity in the past year by bidding competitively for mandates and bringing innovative deals that added depth to the domestic bond market.

This was clearly the case in the landmark bond switching transaction for Thailand’s Ministry of Finance, the country’s biggest on record and the first multiple-to-multiple switching scheme in Asia.

The MoF had initially expected to undertake two transactions to switch a total of Bt90bn (US$2.75bn) of existing bonds into more liquid benchmark issues. But the June transaction proved so effective that all Bt90bn of bonds were cleared in one go.

Bangkok Bank also helped introduce a back-end amortisation feature in Nam Ngum 2 Power’s Bt6bn triple-tranche project bond in October. The novel structure matched the power producer’s cashflow profile, and, in the process, resulted in substantial cost savings for the issuer.

Nam Ngum became the first issuer from Laos to sell project bonds in Thailand, enabling it to refinance project financing bank loans and clearing the way for more Laotian power producers to fund in Thailand.

Bangkok Bank was the sole bookrunner on the country’s first REIT bond, when Ticon Freehold and Leasehold REIT printed Bt1.8bn of three and seven-year notes in April.

An expansive distribution network also earned Bangkok Bank leading roles in major local benchmarks. It helped arrange True Move H Universal Communications’ Bt23bn bond in December 2016, the largest issue from the Laos Ministry of Finance, raising Bt14bn in October, and two deals for local heavyweight Berli Jucker, raising Bt28bn in December 2016 and Bt40bn in March.

It won several sole mandates, including those for Banpu’s Bt10bn bond in April, DTAC Trinet’s Bt6bn issue in September, Mercedes-Benz Thailand’s Bt2bn deal in July, CH Karnchang’s Bt2bn dual-trancher in October and Saha Pathana’s maiden Bt2bn deal in February, and showed that issuers and investors could rely on it to deliver the right deals at the right time.

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