Govt to issue $1.5-bn bonds a year for 10 years to fund transport projects
The government will issue US$1 billion-$1.5 billion (Bt31 billion-Bt46.6 billion) worth of bonds per annum for the next 10 years to finance its transport-infrastructure projects, in a move that will offer a good opportunity to establish a base for Thai bo
Kittiratt Na-Ranong, who is also deputy prime minister, said, "Issuing bonds worth $1 billion to $1.5 billion is not a problem given the country’s gross domestic product. The risk is worth it if it offers a chance to mobilise more funds in the future."
The bonds, which will be issued continuously for 10 years, could amount to 15 to 20 per cent of the government’s total borrowings for the infrastructure project, or $15 billion of the total $75-billion loan. After 10 years, the government will issue more bonds for refinancing, and this process will create a platform establishing the credibility of future Thai bond issues, Kittiratt said. Thai bond-market prices will serve as data for use by investors and an indicator for Thailand’s economic future.
Of the to-be-mobilised proceeds, about 50 per cent will be used to finance imports of machinery and technology.
Roadshows in New York and London had received good responses, Kittiratt said, adding that they offered an opportunity to clarify Thailand’s economic-restructuring plan, which stresses reduced dependence on exports and more focus on domestic demand. The latter requires more investment in transportation infrastructure, he said.
Kittiratt said roadshows would be made to other countries and territories including Hong Kong, Singapore and Japan, together with greater clarification efforts within Thailand.
The sources of financing for Thailand’s transportation-infrastructure projects, and its flood-prevention and water-management project – which include local borrowing, the country’s $170-billion international reserves, and foreign-currency-denominated bonds – were also explained to investors during the recent roadshows.
In response to investors’ questions on the Thai economy, Kittiratt explained that the recent slowdown was due to delayed investment in the transportation-infrastructure and water-management schemes, while assuring that such investment would go ahead as planned.
In his explanation to investors, he compared Thai politics to two sports teams fighting in a competition. If one team breaks the rules, and the other does the same, there will be chaos, with referees being ignored and the game ending in failure and the audience totally unimpressed. On the contrary, if one plays violently but the other plays according to the rules, the referee can perform his duty to the audience’s satisfaction.
"In politics, ‘audiences’ are important, given their voting rights. The political situation in our country, unlike those of some other countries, remains under control. The government has tried not to engage in arguments that could inflame the conflict. And investors understand this well," he said.
