Thailand’s bond market cruised towards to another issuance record in 2019 with Kasikornbank instrumental in finding innovative ways to deepen and strengthen the markets.
The country’s fourth-biggest lender maintained its top bookrunner position in the baht bond market for the second year running, taking a 20% share of the Bt833.2bn (US$27.6bn) of corporate issuance during IFR’s review period.
Kasikornbank was at the forefront of the industry’s development, providing the best solutions to clients and balancing the needs of both issuers and investors.
The bank was at the heart of a surprising shift to higher-risk structures in a generally conservative bond market. It clinched lead manager roles on two corporate hybrids in the third quarter of 2019, helping Indorama Ventures and B Grimm Power take advantage of the low-rate environment to manage liabilities and funding costs through subordinated perpetual bonds.
Green and sustainable bonds were also a major part of the bank’s strategy to grow the market, and Energy Absolute’s Bt10bn financing was notable for the unconventional method employed. As green documentation was a time-consuming process, the bank advised the renewable power producer to first issue two tranches totalling Bt7bn in July and August to meet its immediate funding needs. After the company obtained Climate Bonds Standard certification and a second-party opinion report, Kasikornbank led a third offering in October, while simultaneously working on the retrospective recognition of the first two issues as green bonds.
The certification helped bring in Asian Development Bank, which took the entire third issuance of Bt3bn on the same commercial terms with institutional and HNW investors.
“These deals helped unlock the mindset of an issuer who believed green bond issuance may bear more cost than benefit,” said Ronnarit Virachanang, Kasikornbank’s head of debt capital markets.
Kasikornbank played its part in preparing the industry for a digital future, helping Provincial Electricity Authority (PEA) become the first state-owned enterprise in Thailand to issue bonds under an electronic bidding programme.
Kasikornbank had to overcome the Thai regulators’ reluctance to remove a bank as an intermediary between the issuer and high-net-worth investors. The bank and the issuer successfully convinced the regulators that electronic bidding would not erode investor protection, and PEA expanded its investor base to the HNW investors and streamlined its filing processes.
“We are pushing for more transparency, and electronic bidding provides that with more disclosures and open information,” said Ronnarit. The bank is talking with SOEs about similar programmes.