Thai firms to boost dollar bond sales

       Thai companies will increase sales of dollar bonds as limited investor demand for baht securities forces them to seek funding elsewhere, according to Standard Chartered Plc.
       "Thai companies are at a crossroads right now," said Ratch Sodsatit, executive vice-president and capital markets head of the London-based bank's Thai unit."Domestic liquidity is not strong enough for them and tapping the dollar market in a big way will be key to solving that."
       Thai companies have sold 288.7 billion baht ($8.5 billion) worth of local currency notes this year, passing the 270.3 billion they raised in all of 2008,according to data compiled by Bloomberg. Sales rose as lending by Krung Thai Bank, Siam Commercial Bank and nine other Thai banks shrank 3.2%,driven by a reduction in loans to companies and small businesses, Citigroup said in a note on Aug 20.
       Petroliam Nasional Bhd, the Malaysian state-owned oil company known as Petronas, sold $4.5 billion worth of bonds on Aug 6 in the biggest dollar issue by an Asian company outside Japan this year, Bloomberg data show.PTT Plc, Thailand's biggest energy company, is in talks with banks for a sale that may be of similar size, said Mr Ratch.
       PTT is well-placed and highly likely to tap the dollar-bond market because it is a long-dated issuer and, in many cases, the limit in terms of the percentage local investors can hold of them has been reached, he said.
       "Thai institutional investors are buying only the safest debt, making the dollar bond market increasingly important for riskier borrowers," he added.
       "The market has shifted over the past year and mutual funds are staying away from anything rated less than A-minus."
       Individual investors, jaded by bank deposit rates as low as 0.8%, are the most active buyers of corporate debt in Thailand, he said.
       A ranking of A- is the seventh-highest investment grade from Standard &Poor's, the New York-based ratings company.
       Easy Buy Plc, the consumer finance company controlled by Japan's Acom Co, sold 3.5 billion baht worth of threeyear notes on July 24, paying a 4.9%coupon. The securities were priced to yield 250 basis points more than benchmark rates and 95% of the offer was taken up by individuals, said Mr Ratch.
       Standard Chartered Bank (Thai) is ranked seventh among Thai corporate bond sales this year with a market share of 4.3%, Bloomberg data show.