Mr. Poomsak Aranyakasemsuk, Director-General of Public Debt Management Office (PDMO), Ministry of Finance, Kingdom of Thailand, has announced the successful completion of its 2nd Bond Switching transaction for fiscal year 2019, the total amount of THB 90 billion.
The highly successful result of this transaction has met all key objectives set by PDMO, namely to increase bond market liquidity in the medium and long-end of the curve, to reduce refinancing risk on shorter dated government debt, and to enhance government’s overall debt portfolio management. This exercise received high demand up to THB 217,473 million from investors, for examples, the Government Pension Fund, the Social Security Office, commercial banks, mutual funds, insurance companies, as well as institutional foreign investors.
As a result, the transaction has effectively reduced 4 tranches of source bonds that going to be matured in 2019-2022 and switches to 6 tranches of destination bonds, as follows;
Source Bonds Term to Maturity Transaction Amount (THB mil.)
1. LB196A 2 months 9,537
2. LB206A 1 year 2 months 27,753
3. LB21DA 2 years 8 months 26,687
3. LB226A 3 years 2 months 26,023
Total 90,000
2) Destination Bonds
Destination Bonds Term to Maturity Transaction Amount (THB mil.)
1. LB23DA 4 years 8 months 5,000
2. LB28DA 9 years 8 months 10,000
3. LB326A 13 years 2 months 15,000
4. LB386A 19 years 2 months 30,000
5. LB466A 27 years 2 months 10,000
5. LB676A 48 years 2 months 20,000
Total 90,000
This Bond Switching exercise accomplished these 4 following objectives;
1. Liability Management: reduce bunching risk of source bonds that going to be matured within 2022 by issuing 6 tenors of medium – long dated destination bond
2. Reduce Refinancing Risk: extending source bonds’ average maturities from 2 years 1 month to 23 years 8 months by average maturities
3. Expand Investors Base: Investor types in this Bond Switching exercise includes commercial banks, mutual funds, private and public funds, life insurances, and international investors
4. Increase Market Liquidity: this Bond Switching exercise increases market liquidity in the Destination Bonds, which are on-the-run benchmark bond such as 5, 10, 15, 20, 30, and 50 years
PDMO together with the Joint Lead Arrangers, Bangkok Bank Public Company Limited, Krung Thai Bank Public Company Limited, and Standard Chartered Bank (Thai) Public Company Limited, would like to take this opportunity to express its sincere appreciation to investors for the strong participation in this bond switching exercise and hope to receive the support in the next Bond Switching exercise in the future.
Bond Market Development Bureau,
Public Debt Management Office
02-271-7999 extension 5807 and 5814
www.pdmo.go.th
Source: Ministry of Finance