CGIF, a multilateral facility established
by the Asian Development Bank and the
Association of Southeast Asian Nations
members with China, Japan and Korea, is
rated AA by S&P.
Standard Chartered Vietnam placed the
bonds. Proceeds will be used for general
corporate purposes in PAN’s packaged food
business.
PAN is an agriculture and food groupwith shareholders that include the
International Finance Corp, the
private sector arm of the World Bank,
and Singapore sovereign wealth fund
GIC.Bangkok Bank immune to EM turmoil
Bonds Thai lender draws on macro strengths to achieve aggressive pricingBANGKOK BANK, rated Baa1/BBB+/BBB+, priced
a US$1.2bn dual-trancher at tight levels
despite poor investor sentiment towards
emerging market bonds and currencies.
The 144A/Reg S offering comprised 5.5-
year and 10-year notes priced at Treasuries
plus 122.5bp and 152.5bp, respectively, split
equally between the two tranches.
Thailand’s largest lender leveraged its
scarcity value to draw robust demand for
its first offshore deal since September 2013,
even as trade tensions and macro concerns
surrounding Argentina, Turkey and South
Africa have weighed on Asian currencies.
The Indonesian rupiah and Indian rupee
are among the worst performing Asian
currencies this year, according to Thomson
Reuters data. By contrast, the Thai baht,
which is up this week, has been the best-
performing currency in South-East Asia,
losing only 0.2% against the dollar so far this
year, according to Thomson Reuters data.
The 5.5-year drew US$1.6bn in orders,
with the US taking an impressive 49%. Asia
accounted for 45% and Europe for 6%.
Despite concerns voiced over long tenors
during the roadshow, the 10-year drew
US$1.4bn. Asia took the majority at 71%,
followed by the US at 24% and Europe at 5%.
“Thailand is a big safe haven within the
context of EM, and one of the markets that
investors are the most comfortable with,”
said a banker on the deal. “Part of our
recommendation to do a deal in this market
was to target this thinking.”
The 5.5 and 10-year bonds were bid at119bp and around reoffer in the aftermarket.FINDING THE RIGHT LEVEL
The two tranches garnered strong demand
globally even as fair-value calculations
showed that the issuer left minimal new issue
concessions. Other emerging market issuers
have had to pay higher premiums to attract
investors that have been cautious amid the
EM sell-off.
Fair value on the 5.5-year was spotted at
Treasuries plus 120bp–122bp, said another
banker on the deal, who calculated it by looking
at the average spread of outstanding Thai
bank paper such as Siam Commercial and
Kasikornbank and adding curve extensions.
CreditSights placed fair value on the 5.5-
year at Treasuries plus 116bp, or 12bp wide of
the existing 2022s, using a similar method.
Even at that level, the new issue concession
was in single digits.
Finding the right level for the 10-year
was less straightforward in the absence of
corresponding maturities in the Thai space,
said bankers.
The abovementioned banker said he used
the five-to-10 curve levels for Asian banks,
which were in a 25bp–40bp range. After
adding an estimate of 30bp–35bp to the 5.5-
year, the final pricing was seen as paying a
low single-digit concession.
CreditSights saw fair value on the 10-year
at Treasuries plus 161bp, based on Indian
and Chinese banks, which are roughly rated
two notches lower and two notches higher,
respectively.The notes began marketing yesterday at
Treasuries plus 145bp area and plus 175bp
area, respectively.
“Despite the tight pricing, there is still a
bid for the right pockets in EM. A lot of fund
managers want to find a deal that they can
forget for the duration of the bond, and this is
one name that checks those boxes,” said the
latter banker.
“This is as predictable as it gets.”
Bangkok Bank’s profit in the second quarter
rose 14.3%, while non-interest income soared
19.1% thanks to a rise in fee income from
bancassurance and mutual funds.
At the end of last year, the lender’s
total capital adequacy ratio and common
equity Tier 1 ratio were 18.2% and 15.6%,
respectively.INVESTOR SUPPORT
By investor type, fund managers received the
largest portion of the 5.5-year notes, taking
60%. Banks and insurers followed, receiving
15% each, state investors took 6% and the
rest went to others.
On the 10-year notes, fund managers
and insurers both received 39% of the deal,
followed by banks with 14%, state buyers with
7% and the rest going to others.
Bangkok Bank has outstanding US$500m
five-year bonds due on October 3.
The issue has expected ratings of Baa1/
BBB+/BBB+, on par with the issuer.
Morgan Stanley and Citigroup were joint
global coordinators and joint bookrunners.
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