HSBC to focus more on state units’ baht-denominated bonds in 2016
HSBC will next year focus more on helping sell baht-denominated bonds issued by Thai state enterprises as it believes this sector will have greater demand for raising funds to support infrastructure investment.
Prakob Phiencharoen, head of debt capital markets, capital financing, global banking and markets at HSBC (Thailand), said the bank wanted to be the underwriting leader in baht bonds in the state-enterprise sector. HSBC recently helped the Finance Ministry and the state-owned banks issue such bonds.
HSBC can help the issuers attract new investors interested in buying these bonds. The bank’s share of the state-agencies baht-bond market this year increased to 35 per cent from 24 per cent in 2014, he said.
Total bond issuance in Thailand this year dropped by 13.3 per cent from 2014. HSBC handled 17 deals, down from 25 last year.
HSBC has only one branch in Thailand, so it has a clear strategy to make deals that could be of interest to institutional investors, because they hold 50 per cent of bonds.
Prakob said the bank also hoped to have a bigger role in helping Thai corporates issue yuan-denominated bonds after the International Monetary Fund included China’s currency in the basket of the IMF’s Special Drawing Rights (SDR).
As a result of this inclusion, offshore yuan bonds will be more attractive to investors and corporates, including banks, that have exposure in the Chinese market. They can issue dim sum bonds to reserve yuan for providing loans to their subsidiaries in China or to support credit for their joint-venture companies there.
He said there were Thai corporates, including banks, with exposure in China that were interested in issuing dim sum bonds next year. Dim sum bonds are those issued outside China and denominated in yuan.
HSBC early this year assisted Thailand’s seventh-largest bank by assets, TMB Bank, issue this country’s first dim sum bond. Many Thai banks have become more aware of this type of bond because it can not only build their profile but also create new investor bases.
The market is also closely monitoring the development of foreign-issued yuan-denominated “panda bonds”, after China began allowing foreign states to sell them in its bond market. South Korea was the first sovereign panda-bond issuer.
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