PTT and Krungsri in biggest THOR-based loan agreement
published : 14 Oct 2021 at 17:09
The Bank of Thailand (BOT) congratulated PTT Public Company Limited (PTT) in collaboration with Krungsri (Bank of Ayudhya PCL) on a successful THB 6-billion long-term loan facility using Thai Overnight Repurchase Rate (THOR) as reference rate for a period of five years. The transaction marks the largest ever THOR-based loan facility since the launch of the new THOR reference rate in Thailand. PTT and Krungsri are regarded as major drivers boosting confidence in Thailand’s financial market.
Ms. Pannalin Mahawongtikul, Chief Financial Officer, PTT Public Company Limited, revealed, “PTT is very grateful to be part of promoting stability and development of the financial market with Krungsri as a long-term partnership to align Bank of Thailand’s policies. This time, PTT has agreed to take Krungsri’s offer of a THB 6-billion long-term loan facility using Thai Overnight Repurchase Rate (THOR) as reference rate for a period of five years. This agreement aims to encourage the use of THOR in light of PTT’s success in being the first private company to spearhead the issuance of THOR reference debentures last August. This loan facility marks a return of PTT to fund raising from commercial banks through a Thai baht long-term loan for the first time in more than a decade. PTT plans to use the loan to grow business in accordance with its vision of ‘Powering Life with Future Energy and Beyond’.”
Mr. Seiichiro Akita, Krungsri President and Chief Executive Officer, said, “Krungsri and PTT have well-established relationships for more than 30 years. As a partner bank, Krungsri has provided financial support to PTT and its subsidiaries under various opportunities through the synergy of Krungsri’s expertise and MUFG’s solid global network to foster the Company’s growth and its leadership in the energy sector domestically and internationally. As PTT expands its role to drive the financial market with the largest-ever loan facility in Thailand based on THOR, Krungsri is extremely privileged to have the opportunity to work together with PTT again as well as supporting the Bank of Thailand’s vital policy of developing the new reference rate in financial markets.”
Mr. Prakob Phiencharoen, Krungsri Head of Corporate and Investment Banking Group, added, “Since 2020, when BOT first introduced and actively promoted THOR as the new Thai reference interest rate, replacing THBFIX, Krungsri and MUFG have realised the importance of this initiative as being key to developing Thailand’s financial markets and financial markets globally, similar to other countries which have transitioned their benchmark away from LIBOR-related indexes. We hope this long-term loan based on the THOR reference rate that Krungsri has provided to PTT, one of Thailand’s leading conglomerates, will help promote greater awareness and confidence among market players, including corporate customers, financial intermediaries, and institutional investors in order to build more THOR underlying financing and hedging transactions. This would then increase market liquidity and enable market players to better hedge against interest rate risks.”
Mrs. Alisara Mahasandana, Assistant Governor, Financial Markets Operations Group, Bank of Thailand (BOT), said, “This THOR-based loan deal reflects the confidence of commercial banks and leading corporations in Thai corporates such as PTT. This application of THOR is regarded as a prototype deal that will promote confidence among market participants in using THOR. THOR is simply a reference rate for overnight lending enabling calculation of interest on each loan repayment due date using the ‘Compounding in Arrears’ method which is consistent with international standards and commercial practices in financial markets. BOT would like to express its gratitude and appreciation to Krungsri and PTT for acting as key drivers in promoting the popularity of THOR-based loan transactions as well as building confidence among market participants in the application of THOR according to international standards. This will certainly contribute to the smooth and timely transition of Thai reference rates from THBFIX to THOR.”