Laos issues third lot of baht bonds in response to high demand

This third lot, made available early this month, is a response to overwhelming demand shown in the previous two bond issues. Twin Pine Consulting, the Laotian government’s financial adviser, expects strong response and high demand to continue as Thai investors remain positive on the neighbouring country’s potential.

Adisorn Singhsacha, managing director of Twin Pine Consulting, said it had been appointed to help launch the third batch of baht-denominated bonds with a minimum value of Bt4.5 billion, and option to add more depending on demand. The tenors are three, five and seven years with approximate minimum coupon rates of 4.76, 5.2 and 5.5 per cent respectively. 

Bank of Ayudhya was selected as sole book runner, and as joint lead arranger along with Standard Chartered Bank (Thai), Kasikornbank, Bangkok Bank, Thanachart Bank and Krungthai Bank ahead of the booking period from the first week of this month.

“Past bonds issued by the [Laotian government] were met with positive responses, which underlines the level of confidence in Laotian sovereign bonds,” Adisorn said. “Thai investors have recognised the potential of Laos in terms of national stability, politics, and its wealth of natural resources – including minerals, gold, copper, and hydroelectric power.” 

Laos plans to construct 20 new hydroelectric plants and is currently studying the viability of 40-50 additional sites. By 2020, the country is expected to have the capacity to produce close to 9,000 megawatts of power. Revenue from power generation is expected to grow steadily, with Laos becoming a major source of electricity for Thailand, Vietnam, Cambodia and China. 

Additionally, Laos intends to drive the growth of its industrial and energy sectors in order to achieve the status of “Asia’s battery”, Adisorn said.

“Compared with Malaysia and Singapore, Thailand is best positioned to become the Asean hub for national capital development – especially given Thais’ large savings and strong interest in high-return, low-risk bonds,” he said.

He said Twin Pine Consulting was preparing another issue of baht-denominated bonds from Laos this quarter with a major company. 

“We have plans to invite Myanmar and Cambodia to join us in raising new capital in Thailand next year.”

Thipphakone Chanthavongsa, Laos’ deputy minister of finance, said her country “requires a sustained stream of new capital to support national development and prepare the nation for integration into the Asean Economic Community”.

Pornsanong Tuchinda, head of corporate banking at Bank of Ayudhya, said the bank was organising informative roadshows for institutional and major individual investors in Thailand.