After receiving initial interest from 25 banks, the Government of Thailand has short-listed three bidding consortiums for its proposed THB24 billion ($626 million) securitization program (see ASR 3/14/05). The project will fund the construction of an office development, which will eventually house 28 government departments. The ABS deal will be backed by future rentals collected from those departments.
Each consortium contains one foreign advisor. HSBC is working with Bangkok Bank, Government Housing Bank and Thai Military Bank; Standard Chartered has joined forces with Siam Commercial Bank, Krung Thai Bank and Kasikornbank, while Deutsche Bank Securities and Bank Thai form the third group.
The bidders met with senior Ministry of Finance officials last Monday to submit final proposals, according to a source. The Ministry of Finance's decision is expected before the end of April.
For a transaction that has not yet been mandated, the Thai government has been specific in what it hopes to achieve from the ABS project: chiefly, long-term funding. The Ministry of Finance wants to do three transactions with maturities of between 13 and 20 years. Its request for proposals even included details on how big the tranches will be on each deal and their maturities.
The agency wants to complete the first deal sometime in the fourth quarter of this year. Although the tenor and size of the tranches will likely be subject to investor demand, the Ministry of Finance says the THB9.5 billion offering will feature THB4 billion of 13-year paper, THB2 billion of 19-year notes and a THB3.5 billion 20-year tranche.
Assuming all goes to plan, a second deal - totaling THB9 billion - will go ahead in 2006; this time featuring a THB2.5 billion 18-year piece and THB6.5 billion of 19-year notes. The third transaction - comprising THB5.5 billion of 18-year paper - is scheduled in 2007.
If reports in the local media are true, the office complex ABS could be just a drop in the ocean if the government goes ahead with other securitization plans. The State Oil Fund, which derives revenues from taxing retail sales of gas, diesel, kerosene and fuel oil, is apparently looking into a THB85 billion program. Meanwhile, the government is allegedly exploring whether ABS offerings could fund the THB150 billion expansion of Bangkok's subway system, due next year.
However, according to competing bankers, government officials made no mention of these plans at last week's meetings. Consequently, they believe it is unlikely anything further will come of the rumors in the near future. Bankers also question whether such large-scale funding - the equivalent of $3.8 billion for the subway project - could be raised purely through ABS issuance.
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