Laos has successfully completed its largest and lengthiest bond issue, with a 14 billion baht ($419 million) six-tranche offering in the Thai debt capital markets.
Not only did the sovereign offering surpass the 12 billion baht issue Laos completed in 2015, it also pushed out its curve from 12 to 15 years, and printed the largest tranche at the longest tenor, demonstrating to Thai investors’ positive long-term view on the credit.
The 2.7913 billion baht three-year, 1.0198 billion baht five-year, 340.9 million baht seven-year, 2.967 billion baht 10-year, 1.5055 billion baht 12-year and 5.3755 billion baht 15-year tranches priced at par to yield 3.65 percent, 4.00 percent, 4.60 percent, 5.20 percent, 5.40 percent and 6.05 percent, respectively.
A portion of the proceeds will be used to relinquish a 1.794 billion baht bond maturity on October 10, as well as other debts, while half will be invested in infrastructure projects. Laos’ debut 1.5 billion baht three-year bond matured in May 2016, and a further 434 million baht bond was redeemed in December.
Financial institutions acquired 57.7 percent of the issue, high net-worth investors took 27.8 percent, asset managers booked 13.9 percent, and others bought 0.6 percent.
The bonds are rated BBB+ by Tris Ratings, so the deal also marked the first time that an issuer with that rating had sold 15-year bonds in the Thai market.
The Ministry of Finance issued the bonds on behalf of the government, and received approval in mid-September to sell baht bonds, converting part of the proceeds into US dollars in the onshore foreign currency market.
The total issue size was capped at 14 billion baht, which Thailand’s Ministry of Finance had approved.
Bangkok Bank, Siam Commercial Bank and Thanachart Bank were joint lead arrangers, while Twin Pine Group was an advisor.