Finally after a three-year-long hiatus, Lao people return to the baht bond market. They seek opportunities for solid investor interest that enables their country to outreach bigger overseas markets. May 2022 would be the target date for the sovereign plans to launch.
This would be the first baht issue which ended in 2018 before.
Thailand’s Ministry of finance has approved MOF Laos in July selling up to Bt5bn of bonds which would expire by the end of May. Having initially Bt5bn, MOF Laos reduces the size to Bt2bn or Bt3bn in order to lead small deals and investors’ confidence. Since Tris’ demotion in mid-2019, Lao would be the first sovereign that tested the market in Thailand. Learning from Tris, it abandoned the funding plan after investors demanded higher pricing to compensate for the demotion.
Tris warned that pandemic has hurt Laos’s economic recovery, liquidity management, fiscal, and external vulnerabilities. So it attempts to seek new investors in Thailand. This is because its previous investor and mutual fund are unable to face the lower-rated credit.
Lao has learned from EDL-Generation, a Laotian state-run electricity company successful strategy last year. Security firms should offer a larger network of high-net-worth investors if they are willing to take higher yields than institutional investors. EDL-Generation last year has sold Bt5.63bn sale of bonds.
Laos must strive to convince Thai investors of its credit strength as well as liquidity.
Trying Thai is the spark of hope Laos have after three rejections from US dollar bonds offered from late 2020 to 2021. The banks major reason for declining it, is because they have concerns over Laos’s debt risk. So bankers believe that the sovereign might find a solution in Thailand investors.
Moreover, Thailand’s investors are very familiar with Laos, due to the Boten-Vientiane railway completion in December. Thailand sees this opportunity as a positive buzz to make a better economic prospect and business opportunities.
