ThailandÆs ETA issues low yield guaranteed bonds

ETA, Thailand’s state-owned operator of roads, the rapid transit railway system and certain boat routes, returned to the market this week with a Bt800 million ($18.6 million) issue of state enterprise bonds. Bangkok Bank, who underwrote the deal, was the sole buyer. The five-year bonds, guaranteed by the government, carry a face value coupon of 3.59%, which in real terms yields 3.60% because of Bangkok Bank’s 0.1% fees.

The low yields highlight the fact that now is a very good time to be an issuer in Thailand. “We’ve seen a steep fall in yields and there is tremendous demand from investors for assets,” explained a local banker. “There is huge liquidity in the market and investors are desperately looking to find homes for their money.”

The banker added that he expected the trend to continue for the foreseeable future. “It’s certainly a good time for issuers, although it’s fair to say that has been the case for the last eighteen months,” he said. “People believe that interest rates are unlikely to rise in the short term, so I expect the current situation for at least the first half of the year and probably the rest of the year as well.”

Last March, ETA issued Bt8.7 billion of notes with maturities of between 6 and 8 years. Those bonds carried far higher coupons than the latest deal, yielding between 6.09% and 7.03%.