Thailand Bond House
The baht-denominated bond market powered ahead in 2018 with record corporate issues and landmark REIT deals, and Kasikornbank was in pole position, well ahead of its competitors.
Kasikornbank covered the full spectrum of credits and structures, meeting investors’ demands for diversity and providing its issuer clients with valuable access to fixed-rate funding. The bank was involved in a wide range of deals from Triple A credits to unrated borrowers, and provided structured solutions, including amortising or perpetual structures, to match issuers with unique requirements.
The bank topped the league table for the 12-month period to November 15 2018 with a 15.8% share of the baht bond market, underwriting a total of Bt103.3bn (US$3.15bn) and leaving its closest rival in the dust with a distant 9.7% share.
It also fully embraced its strengths as a deposit-taking bank, leveraging on its balance sheet to win a total of 28 sole mandates for bonds with a total value of Bt40.8bn during the year under review.
Kasikornbank played a major role in one of the most challenging transactions during the review period – the Bt77bn multi-tranche bond for Thai Beverage in September. This was the second offering of the year from ThaiBev, which had already printed a record-equalling Bt50bn in March. But market conditions were much more volatile in September: benchmark yields were surging while spreads in corporate bonds were widening rapidly, making pricing tricky.
ThaiBev wanted to sell at least Bt70bn – a big ask for any company, especially since investors were full of the credit from the first deal. Kasikornbank, as the lead underwriter, had to manage the issuer’s expectations while working to expand the investor base beyond the usual list of institutional investors. To pull in high-net-worth individuals, Kasikornbank and the other leads crafted a 3.5-year tranche with a yield of 3.2% that hit a sweet spot for wealthy savers: at Bt43.9bn, it ended up as the largest tranche among the seven on offer, significantly expanding ThaiBev’s investor community.
Kasikornbank also took an active role in developing the bond market as a viable funding option for real estate investment trusts. Investors were unfamiliar with REITs, a recently introduced structure in Thailand’s financial markets, so when Kasikornbank brought WHA Premium Growth Real Estate to the market for the first time in March, it hosted a series of non-deal roadshows to educate investors and address their concerns about the structure. The Bt4.2bn dual-trancher was a hit, pulling in Bt7.8bn of orders and giving the REIT a strong investor base with the biggest orders coming from asset management companies and life insurance companies.