The corporate fund-raising tally through bond issuance this year is expected to be just shy of last year's record due largely to the lower number of bonds maturing in 2015, says a senior official at Kasikornbank.
A teller counts a bundle of Thai banknotes. Kasikornbank forecasts the baht will weaken to 34.50 to the US dollar by the end of this year. PORNCHAI KITTIWONGSAKUL
New corporate bonds to be floated this year are expected to reach 551 billion baht, 4% lower than last year's 566 billion baht, said Thiti Tantikulanan, head of the capital markets business division at Kasikornbank (KBank).
The flurry of companies rushing to issue bonds to lock in low interest rates before their anticipated rise later this year will also ensure that this year's potential bond issuance will not be much lower than last year's.
"The amount of corporate bonds due in 2015 is expected to be lower than in 2014, so the issuance of corporate bonds this year is not projected to be higher than last year's," he said.
Of the 551 billion baht worth of corporate bonds expected to be issued this year, 230 billion baht will come from refinancing maturing bonds, 150 billion will be raised by new and existing issuers and the rest to stem from banks' Basel III-compliant bonds.
The country's sluggish growth is not expected to dent the issuance of bonds as the coupon rate is lower than loans from financial institutions, said Mr Thiti.
Commerce, property and finance are expected to be the big bond issuers this year, he added.
The local bond market is expected to be volatile this year in light of a potential rate reversal by the US Federal Reserve, Mr Thiti said, adding that KBank forecasts the US central bank will raise the key rate by 25-50 basis points by the fourth quarter.
The baht is projected to weaken to 34.50 against the dollar by the end of the year due to Fed rate rise, he said.
Meanwhile, Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya blamed the retreat of major currencies against the greenback for the decline in foreign reserves.