Bangkok--15 Oct--Twin Pine Consulting
Lao PDR has underlined its confidence in the Thai capital market with the third batch of bond issue totaling THB 4.5 billion baht with Greenshoe Option to add more, the funds to be invested in development of energy sector. This third lot, to be available in early October, is a response to overwhelming demand shown in the previous two bond issues. Twin Pine Consulting, Lao PDR’s financial advisor, expects strong response and high demand to continue as Thai investors remain positive on the country’s potential.
Mr. Adisorn Singhsacha, Managing Director of Twin Pine Consulting, the capital market development advisor to the Ministry of Finance of the Lao PDR, said, “Twin Pine has been appointed by the Lao PDR to help launch the third batch of Thai Baht denominated bonds with a minimum value of THB 4.5 billion, and option to add more depending on demand, with tenors of 3, 5 and 7 years and approximate minimum coupon rates of 4.76%, 5.2%, and 5.5% respectively. Bank of Ayudhya PCL has been selected as Sole Book Runner, and as Joint Lead Arrangers along with Standard Chartered Bank (Thailand) PCL, Kasikornbank PCL, Bangkok Bank PCL, Thanachart Bank PCL and Krung Thai Bank PCL ahead of the booking period from the first week of October 2014.
“Past bonds issued by the Lao PDR were met with positive responses, which underlines the level of confidence in Lao Sovereign Bond. Thai investors have recognized the potential of the Lao PDR in terms of national stability, politics, and its wealth of natural resources – including minerals, gold, copper, hydroelectric power etc. The Lao PDR 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, and the Lao PDR will become a major source of electricity for Thailand and neighboring countries like Vietnam, Cambodia and China. Additionally, the Lao PDR intends to drive the growth of its industrial (through the Thailand Plus 1 model) and energy sectors in order to achieve the status of Asia’s battery,” Adisorn added.
“The Lao PDR requires a sustained stream of new capital to support national development and prepare the nation for integration into the ASEAN Economic Community,” H.E. Mme. Thipphakone Chanthavongsa, Deputy Minister of Finance of the Lao PDR said. “We primarily relied on loans from international support organizations. Twin Pine Consulting came in to aid us in planning fundraising efforts in Thailand, which served as a new alternative for us. In addition, the Thai Finance Ministry’s policies allow sovereign bond to be issued by finance ministry without requiring rating assessment from credit rating agencies. In 2013, we issued the first lot of Thai Baht denominated bonds worth THB 1.5 billion in May, and was followed by second lot worth THB 3 billion in December. Both lots proved to be a major success. For this third round in 2014, we are financing investments in various government projects especially ones with economic returns. The Lao economy has been growing at a steady pace in recent years with GDP growth at 7.95% in 2013 and an inflation rate of 6.37% - lower than GDP expansion. Our goal is to maintain a single-digit inflation rate. Four factors are driving economic growth in Laos: industry, agriculture, services, and inbound taxation.”
Mr. Pornsanong Tuchinda, Head of Corporate Banking at Bank of Ayudhya PCL, added: “We are honored to be chosen by the Lao PDR to be part of its third bond issue project. The Bank of Ayudhya is organizing informative roadshows for institutional and major individual investors in Thailand. The “Thai Economy and Thailand’s Investment Opportunities” seminar, revealed that Thai investors have considerable confidence in Lao economic growth. Interested parties – including mutual funds, companies, and high net worth individuals – have already expressed interest in purchasing the bond, and we expect total bookings to exceed the THB 4.5 billion cap.”
“Compared to 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,” concluded Adisorn. “In the fourth quarter this year, Twin Pine Consulting is preparing another issue of Thai Baht denominated bonds from Lao PDR with a major company, and we have plans to invite Myanmar and Cambodia to join us in raising new capital in Thailand next year.”