2012_ Domestic Bond Market Development (2012-2015)

June 2012

Domestic Bond Market Development (2012 – 2015) A. Evolution of Bond Market Development (1995 – Present) • Innovation of Government Debt Securities • Equilibrium of Thai Bond Market

B. Building up of Benchmark Bond (FY2007 - FY2012) • Revised the Strategy of Benchmark Bond Issuance • Commitment of Bond Supply • FY 2012 Market’s Favorite Benchmark Bond

C. Bond Supply FY2012 + Funding Needs FY2012 - FY2015 D. Well-Developed Bond Market Improved Government Debt Profile Dramatically • ATM Lengthened • Cost Lowered • Well-Balanced Fixed-Float Ratio • Well-Distributed Maturity Profile

50-year Benchmark Bond March 2nd 2011

12-year and 18-year Fixed-rate Promissory Bond

30-year Benchmark Bond

December 22nd 2010

April 23nd 2008

10-year Inflation Linked Bond July 11th 2011

6-year Step-up Savings Bond

5-year Step-up Savings Bond

June 7th 2010

July 15th 2009

4-year Floating Rate Bond

3-year Retail Bond @ ATM

July 27th 2009

September 12th 2011

FY 2008

2009

Chakkrit Parapuntakul, Director General juk@mof.go.th

2010

2011

2012-2013

Public Debt Management Office Ministry of Finance Kingdom of Thailand

1

A. Evolution of Bond Market Development (1995 – Present) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

• Thai Bond Market Has Grown Strongly for More Than a Decade

• The Thai Bond Market Has Developed Rapidly and Efficiently • Innovation of Government Debt Securities (FY2007 – FY2013)

• Equilibrium of Thai Bond Market • By Issuers • By Credit Rating • By Investors

2

Thai Bond Market Has Grown Strongly for More Than a Decade Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

% of GDP

Domestic Bond Market Capitalisation = 7.7 THB Trillion

128%

140%

As of March 2012 (Classified by Types of Issuers)

120% 100%

92% 77%

80%

67%

60%

24%

40%

7.7 THB Trillion

Asian Fin. Crisis

20%

1%

Corp. Bond

19%

SOE Bond

6%

March 2012

Bank Laon / GDP

Equity / GDP

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

12% 1992

0%

Baht Bond

BOT Bond

Bond Market / GDP

Maturity Profile

2.9 THB Trillion

38%

BOT ATM = 1 yr GOVT ATM = 6 yrs 7 mts

BOT vs GOVT Bond 14%

68% BOT < 1 yr

GOVT Bond 18% MOF

29%

20% 3%

28%

20%

2-3 yr

3-5 yr

6-10 yr

11-50 yr

2.7 THB Trillion

36%

Bond Market Developed Rapidlyand andEfficiently Efficiently The The ThaiThai Bond Market hasHas Developed Rapidly Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Post Crisis – 2000 :

2007 – 2010 :

Next Step 2011-13:

 Bond Market Capitalisation tripled  Government Bonds Outstanding grew by 50 times  Government Bond Market Share jumped from 3% in 1997 to 44% in 2000

 Regular Benchmark Issuance  New Product Development  Regular Market Dialogue with BoT and PDs

(Market Deepening Oriented)  50-yr Bond, ILB, Electronic Retail Bond  Upgrade PD Privileges  Regional Linkage (CGIF)  Amortizing Bond  Bond Switching and Bond Consolidation

Volume Oriented

Development Oriented

3

Pre-Crisis - Illiquid Bond Market - Absence of Benchmark Bond - Dominated by SoE’s Bonds

% of GDP

THB Trillion

67%

FY2007 – FY2013

Innovation of GOV’T Debt Securities

FY 2012-2013

FY 2011

FY 2007-10

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

30-yr Loan Bond

• Lengthen average-time-to-maturity ATM Government Debt Portfolio  5.7 yrs to 6.1 yr • Meet long term investors’ demand

Floating Rate Bond

• Increase floating debt ratio (10% to 18%) • Promote BIBOR (Bangkok Interbank Offered Rate)

Step-up Savings Bond

• Broaden investor base – Retail investors • Low interest burden at the initial periods of bond

Fixed Rate Promissory Note

• Broaden investor base – Insurance / Long-term investors • Non-Benchmark tenors

50-yr Loan Bond

• Combat low interest rate + Lengthen average time-to-maturity • 4th country in the world (1st : UK 2nd : France 3rd : China)

Inflation-Linked Bond (ILB)

• Strong anti-inflationary signal • Deepen the Development of the Bond market • 1st country in Emerging Asian Economies

Retail Bond @ ATM for Micro Savers

• Lower Minimum Amount to Purchase • Offer throughout the year • Can be purchased via ATM, in addition of Bank Retail Branches

Amortizing Bond

• Suitable financing instrument for the government’s investment mega-project in the form of PPP • Pay back the bond principal by installments  Promote the government’s fiscal discipline

Bond Switching & Consolidation

• Allow both issuer and investors to manage and improve their portfolio • Larger outstanding size + Less bond series  more liquidity in the secondary market

PDDF

Upgrade PD Privileges

CGIF

Baht Bond

(Public Debt Restructuring and Domestic Bond Market Development Fund)

(Credit Guarantee and Investment Facility)

Equilibrium of Thai Bond Market Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Issuers

• 80 percent of Thailand’s debt securities were issued by Government, Central bank and State-owned Enterprises

Credit Rating

• 98 percent of Thailand’s debt securities are classified as Investment Grade by local rating agencies

Investors

• Thailand’s government debt securities are held by a wide group of investor types

Thailand Bond Market (Classified by Issuers)

Thailand Bond Market (Classified by Credit Rating)

Government Bonds (Classified by Types of Investors)

BBB Non-rated

2% 2%

A AA

Private Sector

20% SOEs

CB 6%

7%

NR12%

5% AAA

Government

36%

6% Central Bank

38% Source : ThaiBMA (12 April 2012)

4%

Government

SOEs

36%

6

%

Central Bank

38% Source : ThaiBMA (12 April 2012)

Household and Non-profit

Insurance and Other Corporation

33%

15% Depository Corporation

35% Source : CB (30 January 2012)

4

5

B. Building up of Benchmark Bond (FY2007-FY2012) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

• 2007: PDMO Revised the Strategy of Benchmark Bond Issuance in 3 Ways

• Keep Our Word to get Investor Confidence for the Plan  Firm Committed Supply of Benchmark Bond Regardless of Budget Uncertainty • Key Success Indicators (FY2008 – FY2011) • Trading Volume • Turnover Ratio • Demand Concentration • Auction Price

• Market’s Favorite Benchmark Bond (FY 2012) • By Outstanding • By Trading Value • By On-the-run Benchmark Tenors

6

• 2007: PDMO Revised the Strategy of Benchmark Bond

2550 ต Issuance ด 2007: PDMO Revised the Strategy of Benchmarkต Bond in 3 ways

Issuance in 3 Ways I. Reduce Auction Frequency

,

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

from Once a Week

to

Every Other Month

• Full Capacity of All Government Debt Securities (2012) 

II. Increase Auction Size

(to Create Even Distribution of the Benchmark Bond Supply over the Year)

Tenors: 3-5-7-10 yr 15,00020,000

1,100,000 THB Mil

Unit : THB Mil

10,00012,000

15,00020,000

12,00015,000

•Keep Our Word6,000to get Investor Confidence for Plan  8,00010,000

8,000

4,000

Firm CommittedFYSupply FYof Benchmark Bond Regardless FY FY FY FY FYofF

III. Increase Outstanding Size

Budget Uncertainty

Tenors: 3-5-7-10 yr 150,000200,000

Unit : THB Mil

• Key Success Indicators80,000100,000 50,000• Trading Volume 80,000 40,000 • Turnover Ratio FY FY FY • Demand Concentration • Auction Price

100,000120,000

FY

• Market’s Favorite Benchmark Bond • By Outstanding • By Trading Value • By On-the-run Benchmark Tenors

7

100,000120,000

FY

120,000150,000

FY

FY

F

Keep Our Word to get Investor Confidence for the Plan

Firm Committed Supply of Benchmark Bond Regardless of Budget uncertainty Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mil.

+40% Plan

FY2009

Actual

+2%

Higher government funding needs due to Stimulus Package

+170%

approx.+250,000 THB Mil.

Total Funding needs increased from:

+33%

+86%

420,000 THB Mil. to 670,000 THB Mil.

59%)

(+

Benchmark Bond

Treasury Balance = 278,694 THB Mil.

Non Benchmark Bond

Savings Bond

T-Bill (Outstanding)

Others

THB Mil.

FY2010

Plan

0%

Actual

+8%

Lower Borrowing needs due to Economic Recovery approx. -160,000 THB Mil.

-45%

+118%

Total Funding needs decreased from:

-51%

800,000 THB Mil to 640,000 THB Mil

(-20%) Benchmark Bond

Treasury Balance = 417,166 THB Mil.

Non Benchmark Bond

Keep Our Word to get Investor Confidence for the Plan

Savings Bond

T-Bill

Others

Firm Committed Supply of Benchmark Bond Regardless of Budget uncertainty Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

THB Mill

FY 2011

Plan

Actual

-3%

Higher than expected Revenue collection approx. -250,000

THB Mil.

Total Funding needs decreased from: 700,000 THB Mil to 400,000 THB Mil

-38%

(- 36%)

-26% +344%

Benchmark Bond

Treasury Balance = 510,180 THB Mil.

Non Benchmark Bond

Savings Bond

T-Bill (Outstanding)

ILB

-85%

Others

8

FY 2008-FY2011 Key Success Indicators FY 2008-FY2011 Key Success Indicators

1. Trading Volume 2. Turnover Ratio 3.

Demand Concentration 4.

1. Trading Volume 2. Auction TurnoverPrice Ratio Public Debt Management Office, Ministry of Finance, Kingdom of Thailand 3. Demand Concentration 4. Auction Price

5 yr Benchmark Bond : Highest Secondary Trading Volume in

every year (accounted for ¼ of total trading volume) 5 yr Benchmark Bond : Highest Secondary Trading Volume in Unit: %year share(accounted of Market for ¼ of total trading volume) every Trading Volume Unit: % share of Market % Trading Volume %

27 27%

9 9

7% 7% FY

20% 20%

28 28%

20% 20%

9

5 yr Benchmark Bond : Higher Turnover Ratio LB155A

FY

FY

FY

FY

76% 76%

77% 77%

80% 80%

84 84%

LB155A

LB133A

LB15DA

LB133A LB145B LB133A

LB133A

1.5 1.5

Top FY 10 Gov’t Bond SeriesFY– Accounted FY for 84%FYof all Gov’t FY Bond trading in Secondary Trading Volume Top 10 Gov’t Bond Series – Accounted for 84% of all Gov’t Unit: share of Bond%trading in Market Secondary Trading Volume Trading Volume Unit: % share of Market % Trading Volume

75% 75%

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

5 yr Benchmark Bond : Higher Turnover Ratio

FY

LB15DA

4.2 3.1 2.4 4.2 2.8 3.1 2.8 2.4 LB145B

FY

FY

FY

FY

Well developed Benchmark size FY FYBond pays FY off : Even FY with greater FY of issuance, the cost of funding is still at market rate Well developed Benchmark Bond pays off : Even with greater size Unit: Billion the USDcost of funding is still at market rate of issuance, +3.2 bps +1.4 bps

Unit: Billion USD +1.4 bps

+1.2 bps

12.8

+1.2 bps

12.8

7.5

14.7

14.7

+3.2 bps

15.0

15.0

7.5 -0.4 bps

FY

FY

FY

FY

FY

FY08

FY09

FY10 -0.4 bps

FY11

FY

FY

FY

FY

FY

FY08

FY09

FY10

FY11

Total GOVT Bond = 45 Series

TOP 5

(2,277,XXX THB Mil)

> 100,000 THB Mil in Size (45% of Trading Volume)

Next 10 > 50,000 THB Mil in Size

(28% of Trading Volume)

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Outstanding size (THB Mil.)

FY-to-date Market Share of Trading Volume in Secondary Market (Oct 11-Apr 12)

Top 5 (>100,000)

3

TOP 5

Next 10

Bottom 30

45%

28%

27%

3

Next 10

0

50

100

(50,000-100,000) FY 2012 on-the-run LBs

10

ILB 10 %

%

5 30

FRB 50

2

30

9

A

A

A LB

A LB

15

LB A LB326A LB DA LB27DA

LB A LB616A

A

LB165A LB A

OA LB

LB

A

NA LB

A

LB

LB

LB

A

NA

LB

7

LB A LB193A

DA LB

A

LB A LB416A

A

LB

A

1

LB

5 13 19

A

2

LB

A LB

7

LB

A

LB

DA

A

DA

LB

LB

A LB

FY 2012 Market’s Favorites

5

2

LB

A LB

4

A

A LB

1

DA

A LB

7

LB

A LB

4

LB

A

NA LB

9 16

LB A LB176A

A

LB

10

5

LB

10

OA

6

LB

1

ILB217A ILB A

B LB

7

LB21DA LB DA

A

3

A

2

LB

3

LB

LB

B

LB155A LB A

TTM (Year)

LB DA LB15DA

20

LB

5

LB

7

7

3

All 3-5-7-10 on-the-run Benchmark Bond Has Turnover Ratio between 1.2 – 2.7

Classified by Turnover Ratio

(while market turnover ratio = 0.45) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

3

On-the-run Benchmark Bond (Expected Outstanding Size @ end of FY 2012)

Turnover Ratio

Outstanding ≥ 100,000 MB Outstanding 50,000-100,000 MB Outstanding ≤ 50,000 MB

2.7

FY 2012 on-the-run LBs

2.3

2 1.6

3

3

30

DA LB

A

A LB

LB

A LB

A

A LB

LB

OA LB

A

A LB

LB

A LB

A

A LB

NA

A LB

LB

A LB

LB

A

DA LB

A

A LB

LB

A LB

LB

A

A LB

DA

A LB

LB

A LB

LB

A

NA

LB

LB

DA LB

B

A LB

A

NA LB

A

A LB

LB

A LB

LB

A LB

10 20 5

LB

A

A

B LB

LB

A LB

15

ILB

DA LB

OA LB

DA LB

10

LB DA LB AA LB LB155A

LB21DA LB DA

7

A

LB193A LB A

5

LB

LB A LB176A

1

LB DA LB15DA LB A

1.2 1.2

50

Turnover Ratio 0.2 – 1.0

Nearly No Trading

10

C. Bond Supply FY2012 + Funding Needs FY2012-FY2015 Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

• Annual Funding Needs Will Always Be around 600,000 THB Mil. (FY2012-FY2015)

• FY2012 Fund Raising Plan by Bill & Instruments (Including Water Management and Insurance Decree ) • Fiscal Year-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil.

• Funding Instruments : Local Bond Market VS Foreign Bond Markets • Structure of Thai Inflation Linked Bond (Inaugural ILB, July 2011)

11

Annual Funding Needs Will Always Be around 600,000 THB Mil. Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

TENTATIVE

Water Decree

THB Mil.

350,000

1,000,000

06/13

Insurance Decree

50,000

TKK Restructuring 94,170

80,000

FIDF 500,000

98,161

TKK

Restructuring 67,740

260,000

FIDF

340,122

Restructuring 58,940

FIDF

Annual Funding Needs (THB Mil.)

25,000 56,582

441,061

165,000

Deficit

129,124

64,970

139,171

113,014

25,000

52,000

232,575

172,003

199,239

300,000

300,000

58,940

75,171

219,222

400,000

Deficit

200,666

300,000

Deficit

2008

2009

2010

2011

2012F

2013 F

2014 F

2015 F

246,582

686,962

656,746

424,620

1,140,122*

536,973

722,533

653,333

*Not Including Pre-Mature Debt Restructuring of 167,000 THB Mil. (TKK = 149,000 THB Mil. & FIDF = 18,000 THB Mil.)

FY 2012 Fund Raising Plan by Bill

• Deficit • FIDF

400,000 340,122

• Water • Insurance

350,000 50,000

• Pre-Mature Debt – TKK Restructuring – FIDF Conversion

149,000 18,000

As of April 26, 2012

1,140,122MB

1,307,122MB

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Insurance

THB Mil.

TENTATIVE

Water

600,000

17%

300,000

9% FIDF, 121,099

Pre-Mature TKK Restructuring, 31,000

35% Pre-Mature TKK Restructuring, 71,000

39%

Pre-Mature FIDF Conversion, 18,000

Pre-Mature TKK Restructuring, 47,000

FIDF, 81,023

FIDF, 48,000 FIDF, 90,000

Deficit, 93,610

Deficit, 143,736

Deficit, 162,654

-

Q1

Q2

Q3

Q4

121,099 MB

214,610 MB

462,736 MB

508,677 MB 12

FY2012 Fund Raising Plan by Instruments (Including Water Management and Insurance Decree ) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Units : THB Mil.

Instruments

Tenors (Yrs)

1. Government Bond 1.1 Benchmark Bond

Sizable Outstanding Amount → To Enhance Liquidity  Regular Issuance → To Build Yield Curve

70,000 100,000 65,000 52,110 35,000 35,000 26,436 25,000 48,450 60,000 105,000

4 (LB165A) 10 (ILB217A)

1.2 Floating Rate Bond(FRB) 1.3 Inflation Linked Bond (ILB) 2. Savings Bond / Retail Bond 3. Permissory Note (P/N) For FIDF 1 For FIDF 3 For Budget Deficit Pre-Mature FIDF Conversionof P/N

3+ 4+ 4+ 4+

4. Fixed Rate Promissory Note (Fixed-P/N) For Budget Deficit 6. Bank Loan Bank Loan - Water Management Bank Loan - Insurance Pre-Mature TKK Restructuring of Bank Loan

3-year Benchmark ~50,000 MB on LB155A ~ 15x,xxx MB ~20,000 MB on LB15DA ~ 13x,xxx MB

3 (LB155A, LB15DA) 5 (LB176A) 7 (LB193A) 10 (LB21DA) 15 (LB27DA) 20 (LB326A) 30 (LB416A) 50 (LB616A)

 Stable Supply → To Maintain Investor Trust

7. R-Bill

26 April 2012

Benchmark Bond :

~400,xxx

THB Mil.

Total Government Bond :

~500,xxx THB Mil.

107,099 19,573 50,654 -18,000*

12/25/40

35,800

2-4 2-4

350,000 50,000 -149,000** 72,000 1,140,122

6 mths Total Funding Needs (Not including Pre-Mature Restructuring) Total Fund Raising

* Restructuring to 5-yr LB (18,000) ** Restructuring to 5-yr LB (16,000), 7-yr LB (22,000), 4-yr FRB (16,000), 20-yr LB (35,000), ILB (60,000)

1,307,122

As of April 26, 2012

FY-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil.

By Source

(33% of 1,307,122 THB Mil.) or (47% of Total less Decree)

(As of 20 April 2012) (As of April 26, 2012)

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

New Funding = 800,000

Debt Restructuring = 507,122

THB Mil

Funding Needs = 1,140,122 THB Mil

229,154 UN-Raised 170,846

Units : THB Mil.

350,000

130,573 UN-Raised 209,549

43%

62%

103,000

50,000 Raised

UN-Raised

Deficit

Budget Deficit (400,000)

Water Decree

THB Mil.

0%

UN-Raised

UN-Raised 31% 18,000 46,000 0% Pre-Mature Pre-Mature Pre-Mature TKK Pre-Mature FIDF TKK Restructuring FIDF Conversion Restructuring Restructuring (149,000) (18,000)

Raised

0%

Insurance Decree

FIDF FIDF (340,122)

Water Decree Insurance Decree (350,000) (50,000)

FY-to-Date 2012 GOV’T Fund Raising = 426,xxx THB Mil.

By Product

(33% of 1,307,122 THB Mil.) or (47% of Total less Decree)

(As of April 26, 2012)

Units : THB Mil.

R-Bill Bank Loan

0%

Issued

72,000

0%

Plan

Water + Insurance 400,000

91%

P/N

192,899 20,227

SB

5%

5,000

FRB

100,000

ALL LBs = 500,xxx THB Mil.

50%

24,450 24,000

ILB

50%

30,000

LB

COMMITTED Benchmark = 400,xxx THB Mil.

30,000

43% 174,046

13

234,500

Funding Instruments : Local Bond Market VS Foreign Bond Markets Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Well Diversified Investors Ensures Funding Needs

FYFull2012 Full Capacity* : 1,150,000 Mil Capacity* of All Government Funding Instruments 1,150,000THB THB Mil.

Potential Demand for Gov’t Bond 2012

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

LB 3 yr

150,000 THB Mil.

LB 5 yr

120,000 THB Mil.

LB 7 yr

80,000 THB Mil.

LB 10 yr

80,000 THB Mil.

LB 15 yr

60,000 THB Mil.

LB 20 yr

60,000 THB Mil.

LB 30 yr

30,000 THB Mil.

LB 50 yr

20,000 THB Mil.

Benchmark Bond

CB 6% LB 5/10 ILB

50

Insurance and Other Corporation

NR12%

30 20

SB

15

10 7 5

Benchmark Bond

~600,000 THB Mil. (52%)

Savings Bond

~100,000 THB Mil. (9%)

Promissory Note

~100,000 THB Mil. (9%)

Fixed Rate Promissory Note ~50,000 THB Mil. (4%)

3

Household and Non-profit

~50,000 THB Mil. (4%)

Floating Rate Bond

Depository Corporation

~200,000 THB Mi (18%)

Total

1,150,000 THB Mil. (100%)

35%

Outstanding of Foreign Debt

Depository Corporations

400

- Retail - Non-profit org.

200

Non-Residence

?

• To keep the presence of KOT Bond (Kingdom of Thailand) in the foreign market

Equiv. 28,000 THB Mil Soft Loans JBIC IBRD Other

Bank loan FRB / LB

• To diversify portfolio of government debt

Equiv. 41,000 THB Mil (1.4% of Gov’t Debt)

Commercial Papers Samurai bond 5 yr 20,000 Yen Mil Samurai bond 7 yr 10,000 Yen Mil MTN 40 USD Mil

400

Source : CB (30 January 2012)

* Under favorable market liquidity + using All funding instruments

Equiv. 13,000 THB Mil

33%

15%

- Life Insurance - Pension Funds

~50,000 THB Mil. (4%)

Inflation-Linked Bond Bank Loan

THB Bil.

P/N LB

64,800 Yen Mil 66 USD Mil 19 USD Mil (as of Oct 2011)

• To maintain KOT Bond as a reference benchmark yield for Thai private sector issuers • To avoid crowding out effect on domestic bond market Concerns : exchange rate risk / swap cost / natural hedging

Structure of Thai Inflation Linked Bond (Inaugural ILB, July 2011) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Format

Capital Indexed Bond (with Principle Protection)

Currency

Thai Baht

Tenor

10 years

Programme Size

40,000 THB Mil. (1.3 bil USD equiv.)

Interest Payment

Every 6 months

Index

Headline CPI

Indexation Lag

3 months

Index Ratio

CPIt /CPI0 (TBMA’s calculation)

Real Yield

1.2

Repayment Method

Bullet

Next Step Continuing Issuance

PD’s responsibility

8 INTERNATIONAL AWARDs

Allocations Foreign Institutions

Local Institutions

15,000 MB

20,000 MB

5,000 MB

Local Retail

Subscription : approx. 1.6 times

Enhance ILB liquidity  

FY 2012 : Develop regular annual auction plan (every quarter) FY 2012 : Top-up the existing tenor to enhance liquidity : 60,000 THB Mil. (2 USD Bil equiv.)

(15,000 THB Mil. each in Feb Apr Jun and Aug) FY 2013 : Issue other Benchmark tenors (5-15years ILBs)



FY 2012 : Maintain portion of successful bid in ILB primary market FY 2013 : Maintain portion of ILB trading in secondary market FY 2013 : Provide firm bid / ask spreads in secondary market Best Sovereign Bond 2011 Best Thailand Deal 2011 Best Local Currency Bond 2011 Best Thailand Deal 2011 Thailand Capital Markets Deal of the Year 2011 Deal of the year from Asia Outstanding Issuer of the Year The Most Impressive Local Currency 2011

Enhance Liquidity

: Asiamoney Awards : Asiamoney Awards : FinanceAsia Achievement Awards : FinanceAsia Achievement Awards : IFRAsia Asia Awards : Euro Money : Asset Asian Awards 2011 : Euroweek Asia

14

D. Well-Developed Bond Market Improved Government Debt Profile Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

• Public Debt Outstanding (as of Dec 2011) = 4.3 THB Trillion (40% of GDP) • Total GOV’T Debt (Direct + FIDF) • Average-Time-to-Maturity (ATM) • Average Cost • Fixed : Float

= 3.04 THB Trillion (71% of Public Debt) = 6y 4m = 4.6% = 82 : 18

• Well-Developed Bond Market Improved GOV’T Direct Debt Profile Dramatically • Average-Time-to-Maturity (ATM) = 7y 5m • Average Cost = 4.4% • Fixed : Float Ratio = 82 : 18 • Maturity Distribution Profile = 52-20-28

• Full Capacity of All Government Funding Instruments (FY2012)  1,150,000 THB Mil

• Maturity Profile of GOV’T Funding Instruments (Strategic Framework) • Average-Time-to-Maturity (ATM) • Fixed : Float • Maturity Distribution Profile

15

= 9y = 70 : 30 = 50-30-20

Public Debt Outstanding (as of Dec 2011) = 4.3 THB Trillion (40% of GDP) Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Components of Public Debt

Units : THB Mil.

1. Government Debt (excluded FIDF)

1,914,420

2. Government Debt (for FIDF)

1,174,101*

3. Non-Financial State Enterprise Debt

1,061,012

4. Special Financial Institutions Guaranteed Debt Public Debt Outstanding (as of Dec 2012)

Special Financial Institution Guaranteed Debt

3

% 0.15 THB Trillion

148,364 4,297,897

*Including 32,000 THB Mil. of Prefunding

Non-Financial State Enterprise Debt

25%

GOV’T Debt

1.06 THB Trillion

45% 1.95 THB Trillion

GOV’T Debt (for FIDF)

27% 1.17* THB Trillion

16

 Average-Time-to-Maturity (ATM) = 6y 4m  Average Cost = 4.6%  Fixed : Float = 82 : 18 As of Dec 2011

Total GOV’T Debt = 3.04* THB Trillion (71% of Public Debt) * Excluded 45,898 THB Mil. of Foreign Debt

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand Assumptions : 6 months BIBOR = 3.245%, 6 months Fixed Deposit Rate = 2.38125%

FIDF 1

 ATM = 4y 8m  Avg. Cost = 5.0%  Fixed : Float = 82 : 18

FIDF 3

300,000 233,023

Maturity Profile

40%

10 yrs +

14,000

year 6 - 10

35,000

32,000

69,000 63,800

37,900

25,000

7% next 5 yrs

40,000

15,000

GOV’T Debt (for FIDF) = 1.17** THB Trillion 75,000

63,178 39,836

144,099

16,731

64,124 64,970

58,440

-

18,000

100,000

65,000

200,000

53%

TTM Fiscal Year

TKK

 ATM = 7y 5m  Avg. Cost = 4.4%  Fixed : Float = 82 : 18

On-lending Loan

52%

next 5 yrs

year 6 - 10

10 yrs +

13,000

27,000

20,000

5,500

5,000

41,900

28%

-

61,950

50,000

43,000

47,000

Maturity Profile

0000 20%

15,700

18,900 76,700

31,000

-

59,000

40,000

86,632

138,000

145,994

82,230

GOV’T Debt (exclude FIDF) = 1.87*** THB Trillion 93,830

100,000

199,239

172,003

200,000

188,222

58,940

300,000

Budget Deficit 7,612

140,170

**Including 32,000 THB Mil. of Prefunding

TTM Fiscal Year

***Excluded 45,898 THB Mil. of Foreign Debt

(1) (2) (3) (4)

Well-Developed Bond Market Improved GOV’T Direct Debt (1.87 THB Mil.) Profile Dramatically

ATM Lengthened Cost Lowered Well-Balanced Fixed-Float Ratio Well-Distributed Maturity Profile

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

As of Dec 2007

Average-Time-to-Maturity LENGTHENED by 2 yrs

As of Dec 2011

ATM

7 y 5m

ATM

5y 3m Avg. cost

Avg. Cost LOWERED by 10 bps

4.5%

.

Avg. cost

4.4%

(While ATM Lengthened by 2 yrs)

Float

Well-Balanced Fixed/Float Ratio (Target : Fixed/Float ratio = 80 : 20)

10%

Float

Fixed

Fixed

90%

82%

Maturity Profile as of Dec 2009

61%

Well-Distributed Maturity Profile next 5 yrs

17

Maturity Profile as of Dec 2011

52% 24%

(Target : Maturing Debt in the next 5 yrs ≤ 50% of Total Debt)

18%

year 6 - 10

20%

15% 10 yrs +

next 5 yrs

year 6 - 10

28%

10 yrs +

Full Capacity* of All Government Funding Instruments

1,150,000 THB Mil.

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

LB 3 yr

150,000 THB Mil.

LB 5 yr

120,000 THB Mil.

LB 7 yr

80,000 THB Mil.

LB 10 yr

80,000 THB Mil.

LB 15 yr

60,000 THB Mil.

LB 20 yr

60,000 THB Mil.

LB 30 yr

30,000 THB Mil.

LB 50 yr

20,000 THB Mil.

50 30 20

Benchmark Bond

15

10

7 5

Benchmark Bond

~600,000 THB Mil. (52%)

Savings Bond

~100,000 THB Mil. (9%)

Promissory Note

~100,000 THB Mil. (9%)

Fixed Rate Promissory Note ~50,000 THB Mil. (4%)

3

Inflation-Linked Bond

~50,000 THB Mil. (4%)

Floating Rate Bond

~50,000 THB Mil. (4%) ~200,000 THB Mi (18%)

Bank Loan

Total

1,150,000 THB Mil. (100%)

* Under favorable market liquidity + using All funding instruments

(A) ATM = 9 yrs (B) Fixed : Float = 70 : 30 (C) Maturity Distribution Profile 50 - 30 - 20

FY2012 Maturity Profile of GOV’T Funding Instruments

Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

50% (≤ 5 yrs)

Benchmark Bond

580,000 THB Mil 150,000

ATM Cost (Avg. past 3 yrs) Fixed : Float

350,000 THB Mil

10y 8m +5 bps 100 : 0

20% (≥ 11 yrs) 210,000 THB Mil

15 15

20 20

20,000

30,000

50,000

60,000

80,000

100,000

60,000

120,000

30% (6-10 yrs)

80,000

150,000

-

55

6

7

10 11 10

30 30

25

150,000

Fixed P/N 50,000

90,000

Bank Loan

10 11

ATM Cost (Avg. past 3 yrs) Fixed : Float 5,000

50,000

6

25,000

25,000

25,000

5

5,000

Savings Bond

25,000

100,000

FRB

10 11

15

20

25

6y 11m + 80 bps 65 : 35

30

40

15

20

25

 Not-to-Collide with Benchmark Tenors

30

30,000

5,000

6

5,000

50,000

5

25,000

25,000

1

25,000

25,000

-

ILB

50,000

100,000

50,000

1

50,000 10,000

100,000

90,000

50,000

50,000

Alternative Instruments

P/N

50,000

150,000

50,000 10,000

100,000

50 50

40

30,000

3

1

40

50

18

For Further Information : Pimpen Ladpli

+66 2271 7999 ext. 5802

pimpen@pdmo.go.th

Director of Government Bond Market Development Division Acting Director Bond Market Development Bureau

Nattakarn Boonsri

+66 2271 7999 ext. 5803

nattakarn@pdmo.go.th

Director of Fund Management and Bond Market Infrastructure Development Division

Chatmanee Sinsiri

+66 2271 7999 ext. 5804

chatmanee@pdmo.go.th

Director of International Bond Market Policy Division

Pothirat Kijsriopak

+66 2271 7999 ext. 5812

pothirat@pdmo.go.th

+66 2271 7999 ext. 5806

ittipong@pdmo.go.th

Economist

Ittipong Kanluan Economist

Bond Market Development Bureau, Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

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