BAY looks to green bonds for fundraising

BAY looks to green bonds for fundraising

Move to comply with responsible lending

Bank of Ayudhya (BAY) is focused on issuing environmental, social and governance (ESG) bonds next year as a means to comply with the Bank of Thailand's responsible lending policy.

The bank is studying raising fresh funds through green bond offerings for alternative energy and green building projects next year, said Poonsin Wongthawatchai, executive vice-president and head of ESG for BAY.

Demand for ESG bonds has been rising from both issuers and investors, locally and internationally.

With a lower ESG bond supply, the coupon rate for such debentures has increased, he said.

"ESG bonds are a tool for issuers to manage risk as they have more conditions than general debentures and can benefit issuers' profitability in the longer term," said Mr Poonsin.

In Thailand, TMB Bank, Kasikornbank, B.Grimm Power and BTS Group Holding have already issued green bonds.

BAY and its financial subsidiaries issue debentures worth billions of baht per year, but they recently started to issue ESG-related bonds, he said.

Annual green-labelled bond issuance globally increased from US$2-3 billion in 2012 to $170 billion last year.

BAY, the country's fifth largest lender by assets, emerged separately as the first gender bond issuer, offering $220 million worth of female entrepreneur bonds on Oct 16.

The seven-year maturity bond with a coupon rate of 110 basis points on top of the London interbank offered rate, constituting around 3% per year, has been offered to two global financial institutions: IFC, a member of the World Bank Group, and the German Investment Corporation, in amounts of up to $150 million and $70 million, respectively.

Mr Poonsin said the bank will use proceeds arising from the gender bond issuance to extend loans to female entrepreneurs who are small business owners.

The maximum credit line for individual small and medium-size enterprise (SME) borrowers is set at 15 million baht and at 20 million for corporate SME business operators.

Some 7 billion baht in funds are expected to be sufficient for loan extensions for two years.

BAY shares closed yesterday on the SET at 33 baht, up 25 satang, in trade worth 4.39 million baht.


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