The Public Debt Management Office (PDMO) plans to issue a sustainability-linked bond (SLB) worth 130 billion baht for fiscal 2025.
According to PDMO director-general Patchara Anuntasilpa, an initial issuance of bonds worth 20-30 billion baht will be made this month, including the SLB406A bond series, featuring a 15-year term and targeting institutional investors, with interest expected from insurance companies and cooperatives.
The bonds are to be distributed through four underwriters: Bangkok Bank, Krungthai Bank, Bank of Ayudhya and Standard Chartered Bank (Thai).
The office is scheduled to conduct the book-building process on Nov 19, with the bond's issue date set for Nov 25.
Speaking after a meeting with financial institutions to discuss the SLB issuance on Monday, Mr Patchara said the SLB will be tied to two national performance indicators: a target to reduce greenhouse gas emissions by 388,000 tonnes of carbon dioxide equivalent by 2030, and increasing battery electric vehicle (BEV) usage to at least 440,000 vehicles per year by 2030. Thailand's current BEV usage is around 70,000 vehicles per year.
He said if Thailand fails to meet these targets, a penalty will be imposed by increasing the interest rate on the SLB by 2.5 basis points per unmet indicator.
If both targets are not met, the interest rate will be increased by a total of five basis points. For example, if the SLB interest rate is set at 2% and Thailand fails to meet both targets, the interest rate will rise to 2.05%.
Conversely, if the targets are achieved, the interest rate will be reduced by 2.5 basis points per indicator that is met.
The PDMO's outstanding sustainability bonds amount to 480 billion baht.
According to Mr Patchara, after informing domestic investors of this year's SLB issuance plan, the office will conduct a roadshow for foreign investors in Hong Kong and Singapore next week.
He said the issuance of this bond complies with international standards, specifically those of the International Capital Market Association and the Asean Capital Market Forum.
The bond has been verified and certified by DNV, an independent global entity providing second-party opinions.
Thailand is committed to the Paris Agreement, pledging to cut carbon emissions by 30-40% by 2030 from the current level of 555 million tonnes. Achieving a 30% reduction would mean cutting emissions by 222 million tonnes by 2030. Thailand also targets carbon neutrality by 2050 and to be net zero carbon by 2065.