The uncertain political climate surrounding Thailand - following Prime Minister Thaksin Shinawatra's unscheduled departure in early April - has put on hold an ambitious infrastructure program, of which securitization was to be an important component. However, there is still some expected ABS activity involving state development company Dhanarak.

Acting Prime Minister Chidchai Wanasathitya said last week that bidding for project contracts - focusing heavily on improving Thailand's transport and communication systems - has been suspended until further notice. Local analysts say no contracts are likely to be awarded until the second half of 2007, delaying the start of development until 2008.

As envisioned by Shinawatra, the government would have invested some THB1.8 trillion ($43.6 billion) on infrastructure between 2006 and 2009. Some bankers estimated securitization transactions would have raised around 25% of the funding needed.

The first deal

The government completed in November the first ABS issue from a THB24 billion program, which will fund the construction of a huge office complex on the outskirts of Bangkok (ASR, 12/05/05).

The THB10.3 billion deal, which was backed by payments under a 30-year contract received by Dhanarak, attracted widespread interest from domestic and offshore investors.

Dhanarak said recently that a second THB8.2 billion offering will go ahead in the fourth quarter of 2006, with the third and final THB5.5 billion deal scheduled for 2007. With construction well under way, the current political situation should not affect the timing of either issue.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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