Thailand Bond House: Kasikornbank

IFR Asia Awards 2021
3 min read
Kit Yin Boey

Leading edge

Kasikornbank was at the helm of exciting developments in Thailand’s domestic bond market in 2021, as ESG-related bond financing deepened and the use of digital technology in bond purchases took off.

Primary market issuance in the baht bond market surged as investors who sat on the sidelines in 2020 were flush with funds. Refinitiv data showed a total of Bt1.01trn (US$30.13bn) of bonds were sold in 2021 – beating the last annual issuance record of Bt966bn in 2019.

Kasikornbank put on a strong showing, topping the league table with Bt171bn of deals last year, or a 17% market share. The bank has not been shy about using its balance sheet to structure guaranteed deals to ensure that clients achieve a more competitive cost of funding.

What also set the Thai bank apart from its competitors was its willingness to push the boundaries to help both issuers and investors achieve their targets. A clear example of this was Indorama Ventures’ maiden sustainability-linked bond, which priced in October.

Kasikornbank had worked on the deal for months as the sole SLB adviser for the deal structure as well as the company’s sustainability-linked finance framework and its key performance indicators. The bank had to collaborate closely with the Securities and Exchange Commission of Thailand to expand the SLB issuance rules beyond its limited approval to allow only for coupon adjustments based on the KPIs.

Kasikornbank’s work with the SEC to include the purchase of energy attribute certificates and/or voluntary carbon credits by the company as an alternative to coupon adjustments allowed more investors to participate in the trade. The triple-tranche Bt10bn deal was 1.79x covered on the initial targeted size of Bt6bn, with the five-year tranche priced at 2.48%, the seven-year at 3% and the 10.5-year at 3.6%.

The Thai bank was also successful in its push to encourage more individual investors to subscribe to bonds online last year. The bank provided its digital platform K-My Invest as an alternative to purchasing primary bonds at branches in person, since the latter option was not possible when the government imposed a lockdown around the middle of the year to combat the biggest Covid-19 outbreak at the time.

The online service was a huge success, setting the market up for more digitalisation efforts in the future. The portion of individual investors subscribing online to primary bonds hit 80% by the end of 2021, up from 15% in the pre-pandemic days.

Such achievements kept Kasikornbank at the leading edge of new developments and a step ahead of its competitors in the rapidly growing baht bond market.

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