Demand for corporate funds to rise: RBS

The Royal Bank of Scotland expects to see greater demand for funds by foreign and Thai corporates into early next year, led by companies that were approved by the Board of Investment in the past two years as they start injecting money into their projects.

Charly Madan, RBS managing director and Asia-Pacific head of capital and portfolio management, said yesterday that the money demand from foreign direct investment through the BOI tax incentives would help raise syndicated-loan volumes.

“After seeing the paper in the past two years, now we expect those firms will start their construction in Thailand, which is expected to take one to two years. After that the outputs from the plants will be exported, which will also bolster the Thai economy in the medium term,” he said.

RBS ranked sixth in Asia (excluding Japan) in syndicated loans in the first half and was one of the top three players in bond arrangements. 

The bank covers 38 markets nationwide, of which 10 are in the Asia-Pacific region.

In the first six months, syndicated loans in Thailand amounted to US$7.5 billion (Bt240 billion), a jump by 522.5 per cent from $1.2 billion in the same period last year, he said.

In the first half, Thailand accounted for 16.6 per cent of the syndicated-loan volume of $45.1 billion in Southeast Asia.

Madan said syndicated loans in Thailand were driven by fund-raising demands from mergers and acquisitions by Thai conglomerates in this region.

The potential M&A markets for Thai mid-sized corporates are Myanmar, Vietnam, Laos, Indonesia, Malaysia and Australia. India is another frontier market for Thai companies that want to secure resources and labour, he said.

Madan said RBS had seen a decline in bond issuance in Asia because of the higher costs arising from the uncertainty over the United States’ plans on its quantitative-easing measure. The expected issuers are waiting for the right timing. Still, the bank has suggested to its customers that they should issue bonds this year as financing costs next year will be higher from the increased yields of 10-year US bonds.

He predicted that Thai gross domestic product next year should resume growth of 4-5 per cent, driven by private investment, while the export outlook is expected to recover from the positive economic performance in China and the economic recovery in the US. Thai export growth next year will be higher than the 3-4 per cent expected this year, he added.