Thailand bond house

IFR Asia Awards 2014
3 min read
Kit Yin Boey

Siam Commercial Bank guided issuers through the upheaval of Thailand’s military coup, showing strong leadership and a thorough understanding of the market.

Thailand grabbed headlines in 2014 for all the wrong reasons, as political gridlock and protests on the streets of Bangkok culminated in a military coup on May 22. However, as offshore funds rushed out, onshore funds moved in to fill the vacuum, and SCB was among the first to spot an opportunity to revive capital markets issuance.

Barely seven days after the coup, SCB opened books on a new issue from state-backed oil-and-gas company PTT Exploration & Production. PTTEP was looking to raise a target of Bt17bn (US$517m), a large size even at the best of times, and SCB had to meet that target on its own as sole arranger, an unusual mandate from the issuer.

SCB had brought the deal to PTTEP a few weeks earlier as a way to pre-fund future investments in a low interest-rate environment, and that call underlined the bank’s ability to read the markets accurately as the offering saw strong oversubscription. PTTEP ended up increasing the dual-tranche bond of five and 15 years to a total of Bt19.6bn, at fairly attractive spreads of 78bp and 98bp, respectively.

SCB’s ability to pull off the deal looked even sweeter against the simultaneous delay to a US dollar perpetual bond from PTTEP. That offshore deal was launched once SCB had tied up the onshore issue.

“We are not about chasing deals, we are about understanding the market mechanics, such as market absorption, timing, investor requirements, and about deliverance,” said Sirote Vichayabhai, executive vice president and head of capital markets.

SCB has been a consistent performer in Thailand’s domestic bond markets, and it topped the league table again this year with an 18.7% share of the market from 28 issues in the period under review, according to Thomson Reuters data.

SCB is the largest commercial bank in Thailand with Bt2.6trn in total assets, but Sirote insists that the debt capital markets team does not rely heavily on its balance sheet. “If we do, then we have failed as an investment bank,” said Sirote.

Instead, the bank markets itself on its ability to meet the needs of both issuers and investors, and on its flexibility to react quickly to changing market conditions. In the process, it ensures that it captures efficient pricing for the issuer, and introduces innovative products to allow investors to diversify their portfolios.

It showed off those skills on a variety of deals during the year, including Italian-Thai Development’s Bt6bn bond, rated BBB–, Indorama Ventures’ Bt15bn subordinated hybrid and a debut Bt1.5bn three-year issue for Nawarat Patanakarn.

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