KASIKORNBANK (KBank) has declared success in the issuance of THOR debentures amounting to 1 billion Baht, with the Government Pension Fund (GPF) as a cornerstone investor. This move, in collaboration with KASIKORN Asset Management Company Limited (KAsset), represents Thailand?s first-ever issuance of THOR debentures and THOR interest rate risk management tool.
Mr. Chongrak Rattanapian, KBank Senior Executive Vice President, said that in September, KBank ? in collaboration with KAsset ? issued THOR debentures to local institutional investors for the first time in Thailand, with the GPF being the cornerstone investor. The debentures are Name-Registered, Unsubordinated and Unsecured Bonds without Bondholder Representative, worth a total of 1 billion Baht, with tenor of approximately 3 months and + 0.4075 percent of compound THOR interest rate. On April 2, 2020, Fitch Ratings (Thailand) Limited assigned a credit rating of ?AA+ (tha)? to the debenture issuer, with ?Stable? outlook. The debenture issuer has also registered with the Thai Bond Market Association (ThaiBMA). These debentures, which are under the KBank Debenture Program with a limit of not more than 30 billion Baht, have been permitted by the Office of the Securities and Exchange Commission (SEC) as part of the 2-year Medium Term Note Program.
Mr. Chongrak added that the proposed sales of such debentures represent an important cooperation between KBank and leading institutional investors, including the GPF, KAsset and ThaiBMA, in developing the Thai money and bond markets, where transactions are based on THOR in alignment with the Bank of Thailand?s policy, as well as being a major financial innovation because for the first time in Thailand, the yield of such debentures is based on THOR.
In addition, the issuance of THOR debentures is one of KBank?s important milestones of cooperation with the Bank of Thailand (BOT) in improving the Thai financial market through the development of new financial products to facilitate the permanent cessation of London Interbank Offer Rate (LIBOR) and Thai Baht Interest Rate Fixing (THBFIX) slated for year-end 2021.
Mr. Thiti Tantikulanan, KBank Capital Markets Business Division Head, said that after KBank conducted Thailand?s first THOR interest swap (?THOR IRS?) in August 2020, KBank was pleased to become a lead arranger of THOR debentures and THOR interest rate risk management tool service provider for the country?s first customer in mid-September 2020, with the key objectives of supporting the development of the money market and enhancing liquidity in the market to facilitate the full use of THOR as a Thai interest reference rate in 2021 per the BOT?s policy. Such endeavors have been warmly embraced by investors. KBank has received good technical support in terms of advice regarding market conventions and methods for valuation of such debentures as those offered by ThaiBMA and BOT, as part of their market preparation scheme for when the BOT starts to issue THOR bonds in 2021. The issuance of THOR and THOR OIS bonds by KBank indicates that the market and investors have confidence in KBank?s expertise, as the country?s leading financial institution, in offering fund mobilizing service and risk management through the money and capital markets.
Mr. Arsa Indaravijaya, Assistant Secretary General, Fund Management Group of the Government Pension Fund (GPF), said, ?This transaction is considered a cornerstone of the debt and derivative market that uses THOR bonds, beginning with short-term transactions and paving the way towards long-term transactions. GPF is prepared to support the development of THOR interest rate per the BOT?s approach and believes that Thailand is capable of developing a THOR market with high liquidity, which can better reflect risks of counterparties, as well as the future interest rate outlook.?
Mr. Suradech Kietthanakorn, KAsset Managing Director, said that the company is pleased to become a part of this success that is conducive to the development of the Thai financial market, and is ready to participate in both the debt and short-term derivative market to assist in enhancing the liquidity of the THOR interest rate.