Govt to issue bonds to refinance FIDF debt
The Finance Ministry will start issuing government bonds to refinance the debt of the Financial Institutions Development Fund (FIDF) worth Bt300 billion due this year thanks to lower interest rates, as the cost of refinancing is much lower than the cost o
The central bank has not yet found |a source for funds to repay the FIDF debt.
The Public Debt Management Office is preparing to issue government bonds to refinance Bt206 billion of the FIDF debt due in September this year, said Chakkrit Parapuntakul, the Office director-general.
Since the debt amount is large, the ministry will issue bonds in a phased manner to lessen its impact on the yield curve of government bonds, he said. Each tranche would be not more than Bt50 billion, he said.
He said the previous bonds, worth Bt206 billion, carried a high cost at about 6 per cent per annum. The current market rate is about 3 per cent, so the refinancing should lower the interest cost, he said.
Debt of about Bt30 billion to Bt40 billion would be due in March and the ministry could borrow from the market right away to repay it, he said.
The government has earmarked a budget of Bt68 billion this year to pay the interest cost of the Bt1.14-trillion FIDF debt, but actual interest cost should be about Bt62 billion due to the low interest-rate trend in the market, he said.
The central bank has not yet decided how much more in premiums it could raise from commercial banks to repay the FIDF debt incurred since the 1997 Asian financial crisis. The government recently issued an emergency decree ordering the central bank to pay this debt.
