An additional 40-billion-baht loan facility for paying rice farmers will be auctioned by the Bank for Agriculture and Agricultural Cooperatives (BAAC) on Thursday following strong demand for the first batch of the state-backed farm bank's 50-billion-baht term loan.
Deputy finance permanent secretary Pongpanu Svetarundra said the minimum bid was set at 2 billion baht, while the six-month Bangkok Interbank Offered Rate (BIBOR) would be used as a benchmark for the new term-loan auction.
The BAAC's first 50-billion-baht three-year term loan auctioned last week drew strong demand from local financial institutions, with almost three times oversubscription with a 0.1% lower rate than the BIBOR of 2.2792%, marking the first state-enterprise bonds with a lower rate than comparable government bonds.
The state's Government Savings Bank emerged as the winner for the first batch of the term loan, with payments made in two lots — 30 billion baht yesterday and 20 billion next Friday. Proceeds from the term loan auction are paid to the BAAC, as it used its own liquidity for advance payments to farmers.
As of yesterday, the BAAC had advanced 47.8 billion baht to 469,000 rice farmers.
The healthy demand reflected financial institutions' confidence in a return to normal after the May 22 military coup in contrast to the problems faced by the former Yingluck Shinawatra government.
The previous government was months behind schedule in repaying 92 billion baht to 850,000 rice farmers, as its hands were tied by its caretaker status, which gave it limited authority to borrow fresh funds.
The junta made pledging payments a priority as a pump-priming measure to alleviate farmers' financial burden and create a multiplier effect for the economy.
The Finance Ministry's Fiscal Policy Office recently estimated the payments could add 0.2 percentage points to GDP this year.
Mr Pongpanu said payment for the second tranche of the three-year loan facility would be made on June 19.