PDMO to raise Bt705 bn through bonds

The government will also spend Bt90 billion through Bt50 billion in short-term borrowings from financial institutions and Bt40 billion from the central budget.

After discussions with traders, Suwit Rojanavanich, the bond-market adviser to the PDMO, said that of the total of Bt705 billion needed for the government’s fund mobilisation in fiscal 2015, about half – Bt350 billion – would be raised through benchmark bonds with maturities of five, 10, 15, 30 and 50 years. The rest would be mobilised through Bt40 billion worth of inflation-linked bonds, Bt55 billion in amortised bonds, Bt38 billion in savings bonds, and between Bt10 billion and Bt25 billion in financial negotiable notes. 

Of the total proceeds, Bt390 billion will finance rolled-over debts and Bt315 billion will be for new borrowings. Of the Bt315 billion in new borrowings, Bt250 billion will be used to offset the budget deficit, Bt4 billion for replacement of external debts, Bt2 billion for the disaster-insurance fund and Bt59 billion for re-borrowings. 

In fiscal year 2015, the government will need about Bt90 billion to finance infrastructure projects, which will be executed through state enterprises. Of that amount, Bt50 billion, which will be mobilised through term loans from financial institutions, will finance mass-transit projects and railway double-tracking, and the remaining Bt40 billion will be part of the 2015 budget.

“We will consider borrowings demand for projects when we make term loans. Term loans' borrowing costs will occur when we make it. If we issue bonds, the borrowing costs will be higher,” Suwit said.

The Finance Ministry had been studying the idea of issuing 100-year bonds, but Suwit said that based on a survey of bond traders, most opposed a maturity that long. Previous PDMO bonds have had a maturity of no more than 50 years.