Banks in hurry to raise funds amid expected rate increases
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Banks are rushing to raise funds through debentures ahead of expected rate rises.
Following the unwinding of the US quantitative easing and the rising demand for liquidity for private and public investment projects, interest rates will tend to inch back up.
Financial institutions are planning to mobilise capital through the bond market to lock in low rates.
Kasikornbank will, in September or November, offer baht-denominated hybrid debentures to beef up Tier 2 capital to local institutional investors and high networth investors.
Its application was filed to the Securities and Exchange Commission yesterday.
The planned debentures will replace subordinated debentures maturing next year and will add about Bt10 billion to its capital base, which could decline.
Debenture issues
As of June 30, KBank had consolidated assets of Bt2.34 trillion. The group’s Basel III capital adequacy ratio stayed at 16.06 per cent, of which Tier 1 was 12.92 per cent and Tier 2 was 3.14 per cent.
Until tomorrow, TMB Bank is offering institutional and major investors Bt15-billion Basel III-compliant Tier 2 subordinated notes with 10-year tenure and 5.50-per-cent coupon rate. The planned debentures will replace Tier 2 fixed-income instruments.
Krungthai Bank is marketing US dollar-denominated Basel III-compliant Tier 2 subordinated debentures worth $700 million. The issue was oversubscribed at $3.8 billion.
Thanachart Bank has Tier 2 subordinated debentures worth up to Bt13 billion for sale.
