Thailand has sent out an RFP for a second inflation-linked bond and submissions are due on December 19, according to a source. The sovereign is said to be eyeing a 15-year bond and is expected to issue the linker in February next year.
This would be its second inflation-linked bond, after the Kingdom of Thailand issued its debut Bt40 billion ($1.3 billion) 10-year linker in July last year, arranged by HSBC, Kasikornbank, Krung Thai Bank and Siam Commercial Bank.
Thailand has been actively tapping the bond markets — the Ministry of Finance last week raised Bt30 billion through a 25-year amortised bond. The bond, which starts amortising from the end of the 21st year onwards, was priced to yield 4.26%. Bangkok Bank, Deutsche Bank and HSBC were the bookrunners.
The sovereign is also planning to issue a US dollar bond, which is expected to follow after it has completed its linker. This would be a rare dollar issuance from the sovereign, which typically funds itself cheaply in the baht market.
“The sovereign doesn’t want to crowd out the domestic bond market, so it plans to tap the dollar market next year,” said a source. “But if it does, it will likely go for a longer tenor such as 30-years that isn’t available in the onshore market.”
The sovereign is said to need money to fund its water management projects. Thailand in 2011 went through the worst floods the kingdom has experienced since 1942 and the disaster has driven public spending higher. Since the flood, the government announced plans to spend Bt2.7 trillion ($86 billion) during the next seven years and about Bt350 billion on water management projects alone.
