It increasingly looks likely that the Government of Thailand will follow the example of its peers in Hong Kong and Malaysia by tapping the securitization markets. Reports emerged last week from Bangkok suggesting that the Thai Ministry of Finance is looking to raise up to THB24 billion ($626 million) from an ABS program, with proceeds funding the construction of a large-scale office development. The 500,000 square meter project will ultimately house 28 government department offices.
It was reported that the first deal - totaling THB1.8 billion - will be backed by office-lease rents and could be issued in the third quarter of this year. Local media agencies added that the bonds will have maturities ranging from 13 to 20 years.
However, the talk that bids are due in by Sunday is untrue, according to one banker well versed in the Thai scene. "There will be an RFP coming out for the government center project, but it has not yet been sent out," said the banker. "I understand that any Securities & Exchange Commission registered advisors will be invited to pitch."
Among the foreign securities firms registered with Thailand's SEC are ABN AMRO, BNP Paribas, Citigroup Global Markets, HSBC, ING, JPMorgan Securities and UBS. Citigroup and HSBC might be considered to have the strongest shot if the government seeks foreign advice, as both have recent experience arranging ABS transactions in Thailand.
Should the government proceed with its plans and the deals prove popular, it could open the floodgates for more state-sponsored activity. The government reportedly needs THB2.3 trillion to fund various infrastructure projects; with privatization and securitization the two preferred methods of financing.
On a related theme, MFC Asset Management - which is 52% owned by Thai government entities - is looking at establishing an Islamic securitization facility, exploiting the growing interest in such products from Middle Eastern investors. Although in its early days, MFC says it has government backing to establish an ABS special purpose vehicle, with proceeds likely to finance government-related projects.
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