BAY to issue Bt12bn subordinated debentures

 

 

 

 

The bank also has an option to raise the amount to Bt20 billion, in light of huge demand, as well as the call option at the end of the fifth year.

In a statement, the bank said that the debentures will carry the annual coupon rate of 4.7 per cent. They will be offered to institutional investors and the general public between October 29- November 6 throughout the bank's branch network. Minimum subscription is Bt100,000. The debentures are rated at "A+" by Fitch Ratings (Thailand).

“The bank has enjoyed a strong operating performance and achieved many key milestones during the first half of the year which demonstrates that our focus, efforts and investments in recent years are really starting to bear fruit.  Our total assets reached Bt1 trillion for the first time.  Performing loans grew by 6.3 per cent and we continued to improve the quality of our portfolio by significantly reducing NPLs a further 18.1 per cent since the end of last year.  Our NPL ratio now stands at 2.9 per cent. We expect this strong momentum to continue,” said President and CEO Mark Arnold.

“At a time when deposit interest rates remain low, the bank is issuing this subordinated debenture to offer an attractive investment alternative in the market.  Proceeds from this issue will be used as long-term funds to support strong growth momentum in our corporate, SME and consumer banking businesses, and will also strengthen our Tier 2 capital,” said Arnold.

A number of banks are rushing to issue subordinated debentures, ahead of Basel III which requires sub-debt, which is part of Tier 2 or supplementary capital, not to offer redemption incentives or issue step-ups to buyers.

 

Starting with Siam Commercial Bank's Bt20 billion issue in September, a number of banks have marched to raise funds through subordinated debentures.