Thai corp bond group sees record 2009 issuance

By Arada Therdthammakun BANGKOK, July 10 (Reuters) - Up to 150 billion baht ($4.4 billion) in corporate bonds could be issued in Thailand in the second half of 2009, giving a record full-year total of more than 300 billion baht, the Thai Bond Market Association said on Friday. The association's president, Nattapol Chavalitcheevin, told reporters that 100-150 billion baht in bonds were likely in July-December as firms needed funds for expansion and to refinance debt. "We are quite confident that the amount will exceed 300 billion baht for the whole year, which will be a record for the market," he said. Last year, when firms actively raised funds to refinance debt as interest rates came down, 280 billion baht in bonds were issued. Nearly 215 billion baht of corporate debt was sold in the first half of this year, up 63 percent from the same period in 2008, Nattapol said. "Thanks to the global financial crisis, several blue-chip companies shifted to raising funds in the country, while banks rushed to strengthen their capital base by issuing subordinated bonds. All that helped boost the market," he said. Among firms planning bonds in the second half are Siam Cement , which plans to sell 10 billion baht in October, and Thai Airways, which plans to offer up to 7.5 billion baht the same month. Both want funds to refinance debt. Top energy firm PTT PCL plans a bond sale worth 30 billion baht in late July to provide liquidity and refinance maturing debt. It is being marketed to retail customers. For other planned issues, click on RIVAL SAVINGS BONDS However, some top underwriters said they expected fewer corporate issues in the second half as the government was launching savings bonds in July with attractive coupons, which could push coupons on corporate issues up to expensive levels. The government is offering 50 billion baht of savings bonds as part of its plans to borrow 800 billion baht to fund stimulus spending and fiscal deficits. Nattapol said he expected trading volume in the bond market, excluding very short-dated central bank bonds, to be flat in the second half around the average daily turnover of 13.4 billion baht in the first half, which was up from 9.03 billion baht a year earlier. "It depends on the direction of interest rates. If there is a clear sign that interest rates will reverse and move higher, yields will edge up and volume should drop," he said. Most market players expect the Bank of Thailand's policy rate to remain at 1.25 percent until the end of the year at least. The central bank next reviews rates on July 15. The prospect of another cut faded after it left rates unchanged at its last review in May. However, the central bank has said it could cut again if economic conditions deteriorated. Government bond yields were largely lower in the secondary market on Friday, especially in the medium-to-long-term maturities. Prices rose due to concern about the economic impact of the spread of flu and a decline in the equity market, dealers said. The benchmark yield curve has steepened over the past six months, with short-dated yields dropping 70-107 basis points because of policy rate cuts but yields of medium- and long-term government bonds up more than 100 basis points due to worries about how stimulus measures would be funded. However, yields have fallen back since the government unveiled plans to sell a smaller-than-expected 119 billion baht of bonds in the July-September period, with five-year government debt down 7 basis points since the start of the month. ($1=34.08 Baht) (Editing by Alan Raybould) (([e-mail]; [phone], Reuters Messaging: [e-mail])) Keywords: THAILAND CORPBONDS/ (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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