Krung Thai Bank took advantage of market conditions to launch an inaugural $500 million senior bond on Monday night. The Thai bank had completed roadshows in February, but held off launching a deal immediately as market conditions were choppy.
It is the first US dollar bond from a Southeast Asian bank this year. The initial guidance for the five-and-a half-year bond was Treasuries plus 175bp and this was revised to a final guidance of Treasuries plus 155bp to 160bp with the bonds pricing at the tight end.
Back in 2006, the bank had priced its Tier 1 bond shortly before tanks rolled down the streets of Bangkok and a coup took place. It decided to cancel that offering, in light of the change in market conditions, but managed to return to the market several weeks after.
Krung Thai Bank is seen as a weaker credit compared to the other Thai banks but benefits from government ownership. The Thai government, through the Financial Institutions Development Fund, has a 55% stake in Krung Thai Bank. KTB is rated Baa1 by Moody’s, and BBB by Standard & Poor’s and Fitch, and the bank is one notch below Kasikornbank.
However, based on the initial guidance, it offered a pick-up over its Thai comparables. “It offers value compared to the other Thai banks in the market,” said one investor. “At Treasuries plus 175bp, it is about 25bp to 30bp back of Kasikornbank, the widest of the Thai banks, and we have not seen too much paper from Southeast Asian banks.”
The bonds were drawn down off the bank’s $2.5 billion Euro medium-term-note programme and the order book stood around $2 billion on Monday afternoon, when Asian books closed.
KTB is Thailand’s second-biggest commercial bank by assets with about 18% market share through more than 1,000 domestic branches. As a state-owned bank, KTB has a large exposures to loans to state enterprises. It reported pre-provision income of Bt46.6 billion for the full year 2012, a 28% increase from Bt36.3 billion a year ago.
Bank of America Merrill Lynch and Standard Chartered were joint bookrunners.
Amid the pick-up in the market, Swire Properties and Bharti Airtel both marketed dollar bonds to investors on Monday and were due to price them overnight.
