Prospective Thai issuers will go forward with their securitization plans, despite the Central Bank's recent move to raise interest rates. In an effort to combat inflation caused by rising oil prices, Bank of Thailand increased its key short-term benchmark rate by 25 basis points.
This led to fears that price sensitive ABS originators would delay issuing deals for the foreseeable future. However, the Government of Thailand immediately responded to the speculation by announcing it is still on course to issue its first deal from a THB24 billion ($574.7 million) program later this year (see ASR 5/2/05). The facility will finance the construction of a government office complex.
Dhanarak Asset Management, the state agency in charge of the project, will issue THB9.5 billion of ABS in October with maturities ranging from 13 to 20 years. The Government has targeted pricing of between 65 and 100 basis points over its 10-year treasury bonds.
It is seemingly in an advantageous position to do achieve that, as the four-bank consortium arranging the deal - HSBC Securities, Government Housing Bank, Thai Military Bank and Bangkok Bank - have agreed to hard underwrite the deal, taking on any bonds not sold to investors.
Additionally, AEON Thana Sinsap, the Thai subsidiary of Japanese consumer finance provider AEON Credit Service Co., said last week it plans to tap ABS investors again in 2005. Although no information was given on timing or what underwriter would structure the deal, officials say the company needs to raise funds to finance expansion of its hire purchase business.
AEON issued a THB1.5 billion hire-purchase receivables deal in February 2004 via Standard Chartered, while its most recent trip to the securitization market was this February. The company completed a THB2 billion credit card ABS, arranged by Citigroup Global Markets.
The private placement featured two THB1 billion fixed-rate soft bullet tranches assigned local AAA' ratings by Fitch Ratings. The three-year A1 debentures priced at 70 basis points over government bonds, or 4.03%, while the five-year A2 tranche offered a coupon of 4.92%, or 85 points over comparable government paper (see ASR 2/21/05).
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