PDMO sees lower bond issuance costs

PDMO sees lower bond issuance costs

The Finance Ministry's Public Debt Management Office (PDMO) expects its financial costs for issuing bonds will decline following the recent policy rate cut by the Bank of Thailand's Monetary Policy Committee.

Suwit Rojanavanich, an adviser on public debt, said in the fiscal third quarter the PDMO expects to earmark bonds worth hundreds of billions of baht.

The PDMO will issue 50 billion baht worth of savings bonds in May to refinance its maturing savings bonds worth a combined 80 billion baht and benchmark 30- and 50-year bonds in May and June, respectively.

Coupon rates for the 30-year bonds will be 4.675%, while the 50-year notes will stand at 4.85%. The fiscal year runs from Oct 1 to Sept 30.

Five state enterprises — the Expressway Authority of Thailand, the Provincial Electricity Authority, the State Railway of Thailand, the Bangkok Mass Transit Authority and GH Bank — will offer a combined 20 billion baht worth of bonds in the April-June period to refinance their maturing notes.

There is high demand for long-term bonds from financial institutions including life insurers, the Government Pension Fund and the Social Security Fund to match with long-term investments of their members and insurance policy holders, said Mr Suwit.

He said with the recent rate cut and high demand from financial institutions, the PDMO's financial costs for bond issues will decline.

The committee lowered the policy rate to 2% to provide a cushion against sagging economic growth while inflationary pressure remains in check. But it also cut its GDP forecast to 2.7% this year from an 4.8% projection last October. GDP growth was 2.9% last year.

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