The transaction will benefit from a strong domestic bid. Onshore banks are required to hold a certain amount of government debt, and a yen issue is particularly attractive since, when swapped, the bonds will offer a greater spread than baht-denominated government paper.
According to bankers, all the bonds could potentially be placed onshore in what would essentially be a domestic transaction, relatively immune to global credit conditions.
Institutions that have been contacted are rumoured to include Daiwa, Deutsche Bank, HSBC, JPMorgan, Standard Chartered, Barclays, Nikko Citigroup, MUFJ, Nomura and UBS.
Meanwhile Crown Worldwide, the logistics and moving company based in Hong Kong, has reportedly received an extension for the loan arranged by Standard Chartered which it intended to refinance through a bond or loan transaction.
The company was initially keen to issue a bond in order to diversify its investor base, but deteriorating conditions led it to contemplate the loan market where it would have secured cheaper funding. However the extension from Standard Chartered means that there is now no urgency for the company to borrow.
Worsening credit conditions caused the high-yield iTraxx index to gap to 640 when JPMorgan launched a rescue operation for ailing investment bank Bear Stearns yesterday at the behest of the Federal Reserve and the U.S. Treasury Department. Lower interest rates and massive liquidity injections have offered only a temporary reprieve for the markets.