The state-owned Small and Medium Enterprise Development Bank (SME Bank) plans to issue bonds worth 8 billion baht to raise funds for cheap loans to small business operators.
The bonds will be divided into two batches -- a 3-billion-baht bond with a maturity of three years and eight months, and a 5-billion-baht bond with lifespan of five years and eight months, said Phongchan Samphaengern, senior executive vice-president and acting president of the bank.
Auction dates for the 3-billion and 5-billion-baht bonds are May 27 and June 17, respectively.
The bonds will be sold to institutional investors, who will deposit money at the Bank of Thailand through an e-bidding process, he said.
These include commercial banks, the Government Pension Fund, provident funds, mutual funds, the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, GH Bank, securities companies, and life and non-life insurance firms.
The bond will also be offered to foundations, cooperatives and juristic entities for charitable, art, science and other purposes.
The bank will use the proceeds from the bonds to lend at low interest rates to SMEs through a scheme to upgrade economic communities.
The fund mobilisation is expected to help over 8,000 SMEs access funding, he said.
The central bank will act as a sales agent for SME Bank's bonds, which are guaranteed by the Finance Ministry.
Mr Phongchan said the bond offering will help the bank have appropriate financial costs in the long run and reinforce liquidity. The bonds are expected to receive a warm welcome from investors, given the bank's strong financial position, he said.
SME Bank has been rated at AAA by Fitch Ratings Thailand.