Kot bond market booklet

KINGDOM OF THAILAND BOND MARKET FINANCING THAILAND’S FUTURE & CONNECTING ASEAN

Apr – Jun 2017

Progress Update

» Committing to FY2017 Fund Raising Plan » GOVT Bond Auction Results » T-Bill Plan Auction Results » GOVT Bond Auction Schedule Q3/FY2017 » SOE Bond Auction Schedule Q3/FY2017 » PDMO Bond Calendar FY2017 Basic & Essentials

» Bond Market Development Strategy » Public Debt Outstanding and Its Composition » Total Domestic Public Debt » Bond Market Capitalization and Its Composition » Supporting Inclusive Growth Through ASEAN Bond Market Integration

»

Non-Resident Holding in Domestic Bond

PUBLIC DEBT MANAGEMENT OFFICE MINISTRY OF FINANCE KINGDOM OF THAILAND

Q3/FY2017

Quick Facts Public Debt Outstanding (as of February 2017)

6,090,231 THB Mil. (41.96 % of GDP)

14

Well-Developed Bond Market Improved GOVT Direct Debt Profile Dramatically (as of March 2017) » Average-Time-to-Maturity (ATM) 12yrs 2mth » Average Cost 3.66 % » Well-Balanced Fixed : Floating Ratio 90 : 10 » Well-Distributed Maturity Profile 34:22:44 (TTM<5 : 6-10 : >10yrs)

15

Bond Market Capitalization (as of March 2017)

16

11,238,778 THB Mil. (75% of GDP)     

GOVT Bond 38% of total Bond Market outstanding BOT Bond 29% SOEs Bond 7% Corp Bond 25% Baht Bond 1%

Baht Bond Outstanding and its Market Share (as of March 2017) 79,845 THB Mil. (1% of Bond Outstanding)

19

Non-Resident Holding in Domestic Bond (as of March 2017) » Annual Capital Flow (YTD)  GOVT Bond :

22

 BOT Bond :

» NR Holding in THB Bond  GOVT Bond :  BOT Bond :  Others :

62,609 THB Mil. 51,058 THB Mil. 11,551 THB Mil.

696,819 THB Mil. (6.2% of Thai Bond Market Cap.) 621,137 THB Mil. (14.6% of GOVT Bond Outstanding) 74,985 THB Mil. (2.3% of BOT Bond Outstanding) 697 THB Mil.

Progress Update  Total Fund Raising Plan FY2017  GOVT Bond Auction Results  T-Bills Plan Auction Results  GOVT Bond Auction Schedule Q3 /FY2017  SOE Bond Auction Schedule Q3/FY2017  PDMO Bond Calendar FY2017

1

2

2017 - 2022

750 – 1,150 THB Bil. per year

Government Funding Needs

1,119,xxx

New Borrowing 350 - 600 THB Bil.

86MB

3XXMB

4,XXXMB

38,XXXMB

59,XXXMB 38,XXXMB

THB mil.

Insurance Decree Substitution for foreign currency bond On-Lending

5x,xxxMB

162,xxx

Supplementary Budget Deficit

Per year (2017-2022)

2,XXXMB

390,000

Deficit Bill 58,940

200,666

344,084

300,000

250,000

250,000

390,000

GOVT 140,192

450,000

On-Lending

15,xxxMB

Bond Switching

50,000

Rollover 350 - 550 THB Bil.

Per year (2016-2022)

-0-

52,000

149,209

231,000

307,945

252,898

114,286

189,xxx

177,545

453,367

313,xxx

102,059

101,800

37,900

109,000

-0-

FY2017F

FY2018F

FY2019F

FY2020F

FY2021F

FY2022F

112,708

286,104

FIDF FY 2017

602,XXX MB

New Borrowing

Insurance Decree

Supplementary Deficit

On-Lending

113,014

340,122

191,095

129,124

59,374

104,236

FY2011

FY2012

FY2013

FY2014

FY2015F

FY2016

Revised

162,xxx

Promissory Notes R-Bill, and Others

Roll Over 517,XXX MB

Rollover FIDF Debt

By Bills Remark :

Auction Size Times (Billion Baht)

Total Issuance (Billion Baht)

Symbol

5

LB226A

20 – 36

5-6

140 – 160

10

LB26DA

18 – 20

5-6

90 – 100

15

LB316A

14 - 16

5-6

70 – 80

20

LB366A

11 – 13

5-6

60 – 70

Benchmark Bond

30

LB466A

11 – 13

5-6

60 – 70

5-10-15-20-30-50 yr

50

LB666A

14 – 16

5-6

80 – 90

15,xxx

189,xxx

Benchmark Bond Auction Plan Tenors

Savings Bond

Rollover Govt Debt

1,119,xxx MB

5x

390,xxx

Rollover SOEs Debt

As of Mar 2017

GOVT Fund Raising Plan

50,xxx

Deficit

FY2017

550,xxx

Tentative Plan for Supplementary Budget Deficit - Borrow by issuing short-term instruments and Benchmark Bond - Short-Term instruments will be converted into Benchmark Bond

313,xxx

By Instruments

1. Exclude external funding for both new borrowing and rollover debt with amount of 71,xxx 2. Exclude T-Bill rollover debt As of Mar 2017

Government Bond Supply Keep Increasing Since 2009 THB mil.

Amount of Benchmark Bond to Actual Fund Raising (FY2009 – FY2017)

1,000,000

Others

Benchmark Bond

750,000

1%

-11%

500,000

9%

17%

37% 2%

10% 49% 250,000

0

As of Mar 2017

ALL FY2017

Benchmark Bond is approximately 550 Bil.

50% of FY2017 Funding Needs 1,119 Bil.

THB Mil.

500,000 Benchmark Bond

400,000

Tenors

Symbol

Issuance Size

5-yrs

LB226A

140,000 – 160,000

Total

10-yrs

LB26DA

90,000 – 100,000

15-yrs

LB316A

70,000 – 80,000

20-yrs

LB366A

60,000 – 70,000

30-yrs

LB466A

60,000 – 70,000

50-yrs

LB666A

80,000 – 90,000

550,xxxMil.

Total Benchmark Bonds

550,xxx MB

300,000

5

Top-up

200,000

20

Top-up

Top-up

Top-up

10

30

5

10

15

-

20

-

30

-

-

LB666A LB666A

LB616A

LB466A LB466A

LB446A

LBA37DA LB383A LB396A LB406A LB416A

LB366A LB366A

ILB353A

TTM

LB316A LB316A LB326A

0

LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A LB198A LB19DA LB206A LB213A LB214A ILB217A LB21DA LB226A LB226A LB22NA LB233A LB236A LB244A LB24DA LB25DA LB267A LB26DA LB26DA LB27DA ILB283A LB283A LB296A

Top-up

100,000

Top-up

50 15

-

50

As of Mar 2017

3

Q3FY2016 – Present GOVT Bond Auction Results Classified by Auction Schedule THB Mil.

Q3

120,000

Q4

bps

Q2

Q1FY2017

40

100,000 30 80,000

73,830

69,670

66,409

60,000

55,899 50,061

40,000

36,133

33,860 26,410

20,000

13,402

19,923 18,310 14,643

18,564 16,807 17,609

18,634

7.0

10,230 2.9

4.3

12.4 31,700

11.2

18,605

4.6

T-1= 0 0

20

49,117

8,230

24,815

29,374 29,035

10.3

18,820

17,380 7.6 9,705

14,370 12,143 4.9

7.7

9,560

18,370 17,507

7.2

10,535 10,420

3.5

6.9

6.8

11,0605.8

10,822

9,290

1.6

-1.2

-1.5

-1.7

-2.6

-3.2

0

-0.1

-3.7

-4.3

-5.8

-20,000

0.8

0.5

0.2 -2.1

3.7

3.4

3.0

1.9

10

20,993

-5.2

-6.1

-10 -40,000 -16.5

-17.7

-60,000

-20

-19.9

-80,000 -30 -100,000 -120,000

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

-40

Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Spread [AAY- Yield(T-1)]

Q3FY2016 – Present GOVT Bond Auction Results Classified by Tenor THB Mil.

Benchmark Bond 5 – 10yr

120,000

5-Yr

Benchmark Bond 15 – 50yr

10-Yr

15-Yr

20-Yr

bps

30-Yr

40

50-Yr

100,000 30 80,000 60,000

20

40,000

12.4 11.2

10.3

T-1= 00

7.0 7.6 7.7 6.9

7.2

20,000 1.9 -2.1-1.2

3.5

1.6

3.0

3.7 0.2 -2.6

4.6

3.4 -1.5 -3.2

4.3 4.9

5.8

2.9

0.8

-0.1 -5.8

-20,000

10 6.9

-3.7 -6.1

0.5 -1.7 -4.3

0 -5.2

-10 -40,000 -16.5

-60,000

-17.7 -19.9

-20

-80,000 -30 -100,000 -120,000

4

Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Spread [AAY- Yield(T-1)]

-40

FY2017

 Low Cost of Funding  High Volume of Short-term Demand

T-Bill Auction Result FY2016

THB Mil.

FY2017

Basis Points

75,000

10

Q3

60,000

Q4

Q2

Q1

8

45,000

6

30,000

4

15,000 2.0

T-1=

1.3

00

-15,000

-30,000

0.6 0.3

-1.5 -1.7

-1.5 -1.6

-2.5 -3.0

-1.8 -2.3

0.1

-1.5 -2.6

-0.1 -0.5

1.6 0.9

0.9 -0.1 -0.2

-75,000

-2.9 -2.9 -3.7

-5.2 -5.8

T-bill 3 month T-bill 6 months R-bill 3/6 months

Api-16

May-16

-5.1

-6

-6.1 -8

-8.8 Jul-16

-2

-4

-7.6

Jun-16

0

-4.1

-4.8

-4.8

Participated Amount (Excess Demand) Spread [AAY-Yield(T-1)]

2

-1.9

-4.3

-60,000

-0.2 -0.7 -1.1

-1.1

-1.4 -2.2 -2.4

-5.0 -5.4

0.8

0.5 0.0 -0.5

-3.2 -3.5

-45,000

2.7

2.3 1.6 1.0 1.0

Aug-16

-10 Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

5

6 -

4. LB466A = 5. LB366A = 6. LB666A = LB316A =

3. LB26DA =

1. LB226A =

Re-open Re-open Re-open Re-open

MOF Outright PD (Overallotment)

17-Dec-2026

(Greenshoe Option)

17-Jun-2022

1.875%

Coupon

Maturity Date

40,000

25,000

Total 2.125%

20,000

28 June 2017

20-Jun-2031

3.65%

Re-open

17-Jun-2036

3.40%

24,000

LB316A

17-Jun-2046

2.875%

24,000

14,000

LB366A

LB466A

17-Jun-2066

4.00%

138,000

20,000

12,000

21 June 2017

11,000

12,000

-

14 June 2017

11,000

11,000

7 June 2017

11,000

14,000

20,000

12,000

25,000

-

LB666A Re-open

Total

31 May 2017

11,000

14,000

LB666A 50-yrs

-

20,000

12,000

13,000

LB466A 30-yrs

24 May 2017

17 May 2017

9 May 2017

3 May 2017

26 April 2017

19 April 2017

25,000

LB366A 20-yrs

13,000

LB316A 15-yrs

12 April 2017

LB26DA 10-yrs

-

LB226A 5-yrs

5 April 2017

Auction Date

Auction Schedule for Q2/FY2016 Q3/FY2017 GOVTGovernment BondBondAuction Schedule (Apr â&#x20AC;&#x201C; Jun 17)

7

Source : Debt Management Bureau 2

Quarter 3 Month Week-Date 0.5 Wk. 27 4 SRT GG 6 2,000 Wk. 28 11 Apr Wk. 29 13 18 20 Wk. 30 24,25 27 Wk. 31 2 4 Wk. 32 8,9 11 May Wk. 33 16 BAAC GG 18 20,000 Wk. 34 23 25 Wk. 35 30 1 Wk. 36 5,6 8 Jun Wk. 37 13 15 Wk. 38 20 22 Wk. 39 26,27 29 รวม 22,000 0

Gauranteed and Serviced by GOVT

0

GG : Gov. Guarantee

Sources

27,320

2,520

3

Not Guaranteed by GOVT

0

BMTA

BAAC GG 20,000

NHA GG 4,800

Term/Loan (month) 2 2.5

NG : Non Guarantee

1

2

0 49,320

0

2,520

0

0

0

40,000

0

A

S

3

Next 5 working days

Auction Bond

Next 5 working days (since pricing date)

Syndication Bond

e-Bidding Bond

5,950

BAAC GG 5,000

PWA NG/A 950

Auction Condition

10,000

BAAC GG 5,000

0 BAAC GG 5,000

4,800

0

2,000

Total

Thursday

Thursday

Monday

Date

3,300

PEA NG/A 3,300

5

0

MPC

Bond (year) 7 10 MPC

0

15

Rollover

Borrowing

0

25

Total

New borrowing for investment

New borrwing for capital substitution

0

20

0

0

0

0

0 19,250

5,000

0

0

5,000

0

68,570

0

5,000

2,520

0

5,000

0

43,300

0

0 3,300

950

5,000

4,800

0

2,000

Grand total (Thai Mil.)

950

5,000

Total

Q3/FY2017 SOE Bond Auction Schedule (Apr – Jun 17)

Quarter 2

Quarter 1

8

Mar 2017

Feb 2017

Jan 2017

Dec 2016

Nov 2016

Oct 2016

27

20

13

6

27

20

13

6

30

23

16

9

2

26

19

12

5

28

21

14

7

31

24

17

10

3

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Substitution Day for Makha Bucha Day

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Substitution Day for New Year's Day

Auction T-bill

Auction T-bill

Substitution Day for Constitiution Day

H.M. the King's Birthday

Auction T-bill

Auction T-bill

Baht Bond 1/2017 Application Submission

Auction T-bill

Auction T-bill

Substitution Day for Chulalongkorn Memorial Day

Auction T-bill

Auction T-bill

Auction T-bill

Mon

28

21

14

7

28

21

14

7

31

24

17

10

3

27

20

13

6

29

22

15

8

1

25

18

11

4

Quarterly PD Market Dialogue

Substitution Day for New Year's Day

Tue

29

22

15

8

1

22

15

8

1

25

18

11

4

28

21

14

7

30

23

16

9

2

26

19

12

5

Auction LB666A (50Y) : 13,000MB

Auction LB26DA (10Y) : 14,000MB

Auction LB366A (20Y) : 8,000MB

Baht Bond 2/2017 Application Submission

Auction LB466A (30Y) : 12,000MB

Auction LB316A (15Y) : 11,000MB

Auction LB666A (50Y) : 12,000MB

Auction LB26DA (10Y) : 14,000MB

Auction LB366A (20Y) : 8,000MB

Auction LB226A (5Y) : 25,000MB

Auction LB666A (50Y) : 14,000MB

Auction LB226A (5Y) : 24,000MB

Auction LB316A (15Y) : 15,000MB

Auction LB466A (30Y) : 13,000MB

Auction LB26DA (10Y) : 16,000MB

Auction LB366A (20Y) : 12,000MB

Auction LB226A (5Y) : 36,000MB

Auction LB666A (50Y) : 14,000MB

Auction LB316A (15Y) : 15,000MB

Wed

30

23

16

9

Thu

MOF Outright PD Committee : Quarterly PD's Evalution

Quarterly PD Market Dialogue

MOF Outright PD Committee

Auction LB226A (5Y) : 25,000MB

2

23

16

9

2

26

19

12

5

29

22

15

8

1

24

17

10

3

27

20

13

6

PDMO Bond Calendar FY 2017

31

24

17

10

3

24

17

10

3

27

20

13

6

30

23

16

9

2

25

18

11

4

28

21

14

7

Last day of submission for Baht Bond Application (2/2017)

Auction T-bill

Fri

1

25

18

11

4

25

18

11

4

28

21

14

7

31

24

17

10

3

26

19

12

5

29

22

15

8

2

26

19

12

5

26

19

12

5

29

22

15

8

1

25

18

11

4

27

20

13

6

30

23

16

9

2

Sat Sun 1

Quarter 3

Quarter 4

9

Sep 2017

Aug 2017

Jul 2017

Jun 2017

May 2017

Apr 2017

25

18

11

4

28

21

14

7

31

24

17

10

3

26

19

12

5

29

22

15

8

1

24

17

10

3

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Substitution Day for H.M. The Queen's Birthday

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Substitution Day for Asarnha Bucha Day

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

National *Labour Day

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

26

19

12

5

29

22

15

8

1

25

18

11

4

27

20

13

6

30

23

16

9

2

25

18

11

4

MOF Outright PD Committee : Quarterly PD's Evalution

Last Day of submission for MOF Outright PD's Application

Auction LB666A (50Y) : 14,000MB

27

20

13

6

30

23

16

9

2

26

19

12

5

28

21

14

7

31

24

17

10

3

26

19

12

5

Auction LB26DA (10Y) : 20,000MB

Auction LB366A (20Y) : 12,000MB

Auction LB466A (30Y) : 11,000MB

Auction LB316A (15Y) : 11,000MB

Visakha Bucha Day

Auction LB26DA (10Y) : 20,000MB

Auction LB366A (20Y) : 12,000MB

Auction LB226A (5Y) : 25,000MB

Auction LB466A (30Y) : 13,000MB

28

21

14

7

31

24

17

10

3

27

20

13

6

29

22

15

8

1

25

18

11

4

27

20

13

6

Songkran Festival Day

Chakri Memorial Day

Annual PDMO-Market Dialogue + MOF Awards

MOF Outright PD Committee : Final Review

Baht Bond 3/2017 Application Submission

Quarterly PD Market Dialogue

Royal Ploughing Ceremony Day

Coronation Day

Songkran Festival Day

First Day of submission for MOF Outright PD's Application

30

23

16

9

2

26

19

12

5

29

22

15

8

1

24

17

10

3

27

20

13

6

29

22

15

8

24

17

10

3

27

20

13

6

30

23

16

9

2

25

18

11

4

28

21

14

7

30

23

16

9

Remark : Royal Ploughing Ceremony Day- waiting for an annoucement This schedule is subject to change without prior notice.

29

22

15

8

1

25

18

11

4

28

21

14

7

30

23

16

9

2

26

19

12

5

28

21

14

7

10

Basic & Essentials  Bond Market Capitalization  Bond Market Development Strategy  Public Debt Outstanding  Total Domestic Public Debt

 Liquidity & Secondary Market Trading  Historical Changes in Thai Government Bonds Issuance  Bath Bond Process  Corporate Bond  Non-Resident Holding in Domestic Bond

11

Peers Comparison

BOND market capitalization Source : Asian Bond online (ADB) % : GDP 250%

BOND mkt. cap : GDP

Government BOND Yield Curve

% Yield

210%

Public Sector (GOVT + CB + SOE) Private Sector

200%

150%

Hundreds

218%

129%

76%

95%

100%

67%

10%

9%

Indonesia

8%

Vietnam

7%

50%

22%

6%

0%

Philippines

5%

Malaysia

Share of PUBLIC sectorâ&#x20AC;&#x2122;s Bond to Total BOND mkt. cap. % : BOND mkt. cap.

USD Billions 300

95%

100%

3%

85%

82% 74%

GOVT

58%

150

SOE 23

USD Billions

BOT 95

80

42

Japan

1%

0%

-1% 0

Indonesia

Philippines

Thailand

Singapore

Korea

141

133

0% Vietnam

Thailand

USA

54%

USD Billions

139

1.98%

3.69%

3.52%

2.75%

2%

104

50%

China

4%

Singapore

Malaysia

Te n o r

As of March 31st ,2017

Government BOND Yield Matrix

ASEAN & Peers

As of March 31st ,2017

6m

1 yr

2 yr

3 yr

4 yr

5 yr

6 yr

7 yr

8 yr

9 yr

10 yr

20 yr

30 yr

40 yr

-0.21

- 0.25

- 0.20

- 0.18

- 0.15

- 0.12

- 0.09

- 0.06

- 0.01

0.03

0.07

0.64

0.84

0.96

-

1.02

1.32

1.47

1.61

1.76

1.86

1.96

2.05

2.15

2.25

2.43

2.47

Korea

1.38

1.46

1.58

1.67

1.76

1.85

1.92

1.99

2.05

2.12

2.19

2.34

USA

0.91

1.03

1.27

1.50

1.72

1.93

2.08

2.22

2.28

2.34

2.40

2.76

3.02

Thailand

1.51

1.55

1.60

1.73

1.98

2.14

2.26

2.42

2.56

2.62

2.75

3.30

3.54

3.58

3.69

China

2.88

2.91

2.96

3.00

3.04

3.08

3.15

3.22

3.24

3.25

3.27

3.74

3.75

3.84

3.92

Malaysia

3.20

3.29

3.55

3.63

3.73

3.82

3.91

4.01

4.06

4.11

4.17

4.65

4.77

Philippines

2.42

2.67

3.25

4.10

4.25

4.26

4.66

5.06

5.06

5.06

5.06

5.03

-

4.00

4.70

4.95

5.08

5.20

5.33

5.45

5.66

5.87

6.08

5.95

6.49

6.74

6.86

6.92

6.98

7.04

7.10

7.18

7.26

Japan Singapore

Vietnam Indonesia

-

7.92

8.11

Brunei

Cambodia Laos Myanmar

12

below 1%

2.01% - 3%

over 4%

1.01% - 2%

3.01% - 4%

no data

50 yr

 Funding Infrastructure Investment  Connecting ASEAN

Domestic Bond Market in Transition

Funding Infrastructure Investment Connecting ASEAN (2013 – 2017) FY2017 Highlights

Market Deepening Oriented (2010 - 2012)

Sustainable Source of Fund

Water Decree (350,000 THB Mil.)

Full Funding Capacity : 1,200,000 THB Mil.

Thai Khem Khang (350,000 THB Mil.)

1,900,000 THB Mil. Long-Term Infrastructure Inv’t

Baht Bond (Foreign Issuers Bond)

Baht Bond (CLMV) Credit Guarantee Investment Facility (CGIF)

Regional Connectivity / AEC

Debt Folio Enhancement

Foreign Currency Bond (Plan) ATM Lengthened

Well-Distributed Investor Base

Cost Lowered

Well-Balanced Fixed-Floating Ratio

FIDF Decree Passed = 70,000 THB Mil. Fiscal Space

Well-Distributed Maturity Profile / Bond Switching Bond Switching (Multiple-to-Multiple)

Appointed 14 MOF-Outright PD

Market Infrastructure

Strengthening PD system

Activated Public Debt Management Fund

(Exclusivity, League Table, Greenshoes Option)

STRIPS Bond Inaugural 10-yr Inflation-Linked Bond (10-yr)

Innovation / Product Development

Saving Bond Online

Long-term Fixed Promissory Notes (25-35-45-yr)

Super- Size Inaugural 25-yr Back-End Amortized Bond

Electronic Retail Savings Bond (3-5-yr)

Annual PDMO Market Dialogue Annual PDMO Market Dialogue

Market Consultation

Quarterly PDMO one-on-group MOF Outright PD Dialogue

Quarterly PDMO one-on-one PD Dialogue

Monthly PDMO one-on-one MOF Outright PD Dialogue 50

30

Building Yield Curve / Enhancing Liquidity

15 10 7 5 3

Liquidity-Oriented

300,000 MB

20

8 Tenors of Benchmark Bonds

150,000 MB Outstanding Amount

3 5 7

10

15

20

30

50

Equilibrium of Domestic Bond Market Issuers

• 74 percent of Thailand’s debt securities are issued by Government, Bank of Thailand and State-Owned Enterprises

Credit Rating

• 99 percent of Thailand’s debt securities are classified as Investment Grade

Investors

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

Domestic Bond Market (Classified by Issuers)

Domestic Bond Market (Classified by Credit Rating)

Baht Bond 1%

1% Non-rated

Government Debt Securities (Classified by Types of Investors) Household 4%

Mutual Funds Other 1% 2%

Non- profit organization 1%

A Corp Bond Government

25%

38% BOT

29% Total of 11.2 THB Trillion

Source : ThaiBMA (End of Mar 2017)

Financial Institution 4%

A % 12

12%

Government Government

Government 38%

AAA 4%

SOEs SOEs 8% 8% BOT BOT BOT

39% 38%

29%

2928 % % Total of 11.2THB Trillion

Source : ThaiBMA (End of Mar 2017)

Bot 7%

NR 14%

Contractual Funds 26%

Depository Corporation 15%

Depository CorporationInsurance NR Company 14% 26% %

31

Total of 4.0 THB Trillion

Source : BOT (End of Jan 2017)

13

Public Debt Outstanding (as of Feb 2017) = 6.09 THB Trillion (41.96% of GDP) Components of Public Debt

Units : THB Mil.

3,718,985.02 918,949.89 972,466.27 460,477.61 19,351.89

1. Government Debt (excluded FIDF)

2. Government Debt (for FIDF) 3. Non-Financial State Enterprise Debt 4. Special Financial Institutions Guaranteed Debt 5. Autonomous Agency Debt

6,090,230.68

Public Debt Outstanding

Autonomous Agency Debt

0.32% Special Financial Institutions Guaranteed Debt

19,351.89 THB Mil.

7.56

% 460,477.61 THB Mil.

Non-Financial State Enterprise Debt

15.97% 972,466.27 THB Mil.

GOVT Debt 61.06% 3,718,985.02 THB Mil.

GOVT Debt (for FIDF)

15.09% 918,949.89 THB Mil.

Source : Information Technology Centre, PDMO

Portion of Public Debt Serviced by The Government Public Debt Components “All”

Public Debt Components “serviced by the government ”

6.09 THB Trillion

4.09 THB Trillion

Autonomous Agency Debt

0.32% 19,351.89 THB Mil.

Special Financial Institutions Guaranteed Debt 7.56% 460,477.61 THB Mil.

Special Financial Institutions Guaranteed Debt

serviced by the government

Autonomous Agency Debt

serviced by the government 0.02%

6.33%

Non-Financial State Enterprise Debt

15.97% 972,466.27 THB Mil.

GOVT Debt

GOVT Debt 61.06%

(for FIDF)

3,718,985.02 THB Mil.

15.09%

Non-Financial State Enterprise Debt

GOVT Debt 59.97%

serviced by the government

918,949.89 THB Mil.

0.80% As of Feb 2017

14

100%

67%

Total Domestic Public Debt = 6.09* THB Trillion Assumptions : 6 months BIBOR = 1.72%, 6 months Fixed Deposit Rate = 1.225%, Inflation = 1.44%

Non-financial SOEs

400,000

Note : * Not included External Debt

financial SOEs

As of Feb 2017

Autonomous-Agencies

SOE Debt (Serviced by GOVT) = 435,638 THB Mil.

300,000

Excluding Not serviced by GOVT 792,865 THB Mil. External SOE debt (Serviced by GOVT) 90,326 THB Mil. External SOE debt (Not-Serviced by GOVT) 133,466 THB Mil.

200,000

 ATM  Avg. Cost  Fixed : Floating  Callable

11%

11,500

10,000

2,001

32,000

14,500

25,000

141,348

77,475

5,82910,4003,400 37,908 32,800

0

10,285

TTM Fiscal Year

Next 5 yrs

FIDF 1

400,000

65%

28,198 74,000

Next 5 yrs Budget Deficit

3,000

T-Bill

9,000

400,000

20,000

TKK

On-lending Loan

Water

Ext. Guaranteed Debt

   

6-10 yrs

ATM Avg. Cost Fixed : Floating Callable

Maturity Profile 10,000

34%

101,110

165,902

27,600

29,400

10,000

128,057 12,000

20,000

95,936

196,379 5,500

56,090

80,320

33,581 35,000

214,252

239,798 15,000 28,182

2,400

59,141

58,084

76,700

89,026 59,000

372,510

20,000

18,900

10 yrs +

= 12yrs 2mth = 3.66% = 90: 10 = 6%

24,700

27,000

224,099

431,367

1,381

178,652

76,610

24,465

2,683

33,653100,872

0

DPL

(Excluding foreign debt 96,644 THB mil. )

87,831

100,000

RW

GOVT Direct Debt (exclude FIDF) = 3,622,341 THB Mil.

300,000 200,000

= 3yrs 8mths = 3.88% = 94: 6 = 3% Maturity Profile

2%

TTM Fiscal Year 22,000 6,914

10 yrs +

33%

16,000

126,850 71,000

63,900 7,900

40,000 69,000

138,000

101,800

53,258

0

25,000 104,044

200,000

6%

6-10 yrs

 ATM  Avg. Cost  Fixed : Floating  Callable

FIDF 3

GOVT Debt (for FIDF) = 918,950 THB Mil.

300,000

100,000

Maturity Profile

83%

10,365

100,000

= 2yrs 11mths = 2.65% = 65: 35 = 35%

TTM Fiscal Year

Next 5 yrs

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

Well-Developed Bond Market Improved GOV’T Direct Debt Profile Dramatically

44% 22% 6-10 yrs

10 yrs +

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

Note : Government Direct Debt = 3,345,287 THB Mil. (exclude FIDF and external debt)

As of Dec 2007

ATM

Average-Time-to-Maturity LENGTHENED by 6yrs 9mths

Avg. Cost LOWERED by 84 bps.

As of Feb 2017

12yrs 2mth

ATM

5yrs 3mths

Avg. cost

4.5%

(While ATM Lengthened by 6yrs 9mths)

Avg. cost

3.66% Floating

Well-Balanced Fixed/Floating Ratio (Target : Fixed/Float ratio = 85 : 15)

10%

Fixed

Fixed

90%

90%

54%

Well-Distributed Maturity Profile (Maturing Debt in the next 5 yrs is less than 50% of Total Debt)

Floating

28%

Next55yrs yrs year 6-10 yrs next 6 -10

18% 10 10 yrs yrs ++

34%

Next 5 yrs

10%

44% 22%

6-10 yrs

10 yrs +

15

Bond Market Cap.= 11.2 THB Trillion 140%

GOVT Bond = 4.2 THB Trillion Domestic Bond Market Classified by Issuer

128%

120%

108% 100%

Baht Bond 1%

97%

80%

Corp Bond 25%

60% 24% 40% 20% 12%

BOT Bond 29%

Jan-17 Feb-17 Mar-17

0%

SOEs Bond 7 % 802,418 THB Mil.

Asian Fin. Crisis

Bank Loan /GDP

Equity/GDP

3,279,165 THB Mil.

Bond Market / GDP

Maturity Profile BOT vs GOVT Bond

12%

4,268,561 THB Mil.

84%

≤1

Govt Bond 38%

BOTBOT ATMATM = 7mths GOVT ATM = 10yrs 7mths = 7mths GOV ATM = 10yrs 8 mths

16% 16%

17%

20%

1<yr≤3

3<yr≤5

5<yr≤10

35% 10<yr≤50

As of 31 Mar, 2017

*Source: BOT Exchange rate as of 31 MAr2017

Constantly Loan Bond Issuance Creates an Effective Government Bond Yield Curve % 5.50 5.00 4.50 4.00

Thailand’s Loan Bonds (LBs) weighting in international indices

On-the-run Benchmark Bond in FY2017 Tenor 3 5 7 10 15 20 30 50

Symbol LB226A LB26DA LB316A LB366A LB466A LB666A

GBI-EM Global JP Morgan

Remark Included in GBI Index Included in GBI Index Included in GBI Index -

iBoxx Asia ex Japan Markit

7.44%

9.75%

AGBI Citi

9.76%

Last Update : End of March 2017

50

30

3.50

15

3.00

20

10 2.50

7 5

2.00

3 1.50

- 8 tenors of Benchmark Bond (3 5 7 10 15 20 30 and 50 years) build the benchmark yield curve as a reference rate for SOEs and private sectors - Main Government’s financing instrument - Build liquidity in the secondary market

1.00 0.50

TTM

16

Benchmark Bond Objectives

Source: ThaiBMA Government Bond Yield Curve (end of March 2017)

Tier 1 > 100,000 THB Mil. in Size (85% of Trading Volume)

Total GOVT Bond = 40 Series (Since 1 Oct - 31 Mar 2017)

Tier 2 > 50,000 THB Mil. in Size

(14% of Trading Volume)

Outstanding (THB Mil.)

400,000

FY2017 Market Share of Trading Volume in Secondary Market Tier 2 Tier 1

Tier 1: >100,000MB (14 Series) 350,000

85%

Outstanding size (THB Mil.)

300,000

14%

0

50

1% 100

250,000

Tier 2: 50,000 – 100,000MB (14 Series)

200,000

5 150,000

50

100,000 100,000

15

20 10

50,000

30

LB267A LB24DA LB175A LB214A LB19DA LB466A LB244A LB22NA LB183A LB406A LB396A LB383A

LB21DA LB196A LB296A LBA37DA LB236A LB25DA LB206A LB226A LB616A LB176A LB446A LB666A ILB283A ILB217A

LB416A LB183B LB316A LB17OA LB366A LB26DA LB27DA LB193A LB213A LB326A LB191A LB283A LB198A LB233A

0

FY 2017 on-the-run Benchmark Bond

Source : ThaiBMA

GBI-EM Thailand – JPMCB0

FY2017 Secondary Trading Volume

8 of 10 most Trading Volume have outstanding size over 100 bil.

(Since 1 Oct – 31 Mar 2017)

Outstanding

Trading Volume

(THB Mil.)

(THB Mil.) Current Outstanding ≥ THB 100 Bil. Current Outstanding = THB 50-100 Bil. Current Outstanding ≤ THB 50 Bil.

10 GOVT Bond series are included in JPMCB Index

400,000

3 of which are on-the-run Benchmark Bond (5-10-20-yr)

400,000

FY 2017 on-the-run Benchmark Bond

350,000

350,000

GBI-EM Thailand - JPMCB Trading Volume

300,000

300,000

250,000

250,000

200,000

200,000

5 150,000

150,000

50

100,000 100,000

15

10

100,000

20

50,000

30

50,000

Source : ThaiBMA

LB396A

LB383A

LB244A

LB198A

LB283A

LB406A

LB416A

LB183A

LB233A

LB213A

LB267A

LB19DA

LB616A

LB326A

LB214A

LB24DA

LB175A

LB466A

LB446A

LBA37DA

LB27DA

LB22NA

LB193A

LB191A

LB183B

LB17OA

LB366A

ILB283A

LB666A

LB316A

ILB217A

LB236A

LB296A

LB25DA

LB176A

LB26DA

LB206A

LB196A

LB226A

0 LB21DA

0

17

Historical Changes in Thai Government Bonds Issuance by Bond Types THB Mil.

Saving Bonds

Amortizing Bonds

Inflation-Linked

Long-term (>10 yr)

Medium-term (5-10 yr)

Short-term (<5 yr)

700,000 7,367

600,000

20,141

69,073

54,000 89,379

31,577

500,000

75,000

7,000

65,000 82,234

50,872

3,814

29,338 38,000

40,000

240,000

269,862

400,000

136,641

61,000

152,861

140,733

134,000

22,730 148,900

300,000 151,471

221,110

200,000

223,850 266,139

259,826 215,000

310,000

274,999

100,000

202,000

98,850 47,000

96,000 51,605

46,000

0

11,000

Remark : * Estimated from FY2017 Fund Raising Plan

Average Time to Maturity (ATM) VS Average Cost of Funding GOVT Debt and Public Debt ATM (Year)

12

Gov’t Debt ATM*

11

Public Debt ATM

10.25 Yr

10

Gov’t Debt

9

8.88 Yr

8

Public Debt

7 6 Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Cost (%)

4.25

Gov’t Debt Avg. Cost*

Public Debt Avg. Cost

4 3.69% 3.75

Gov’t Debt

3.5

3.62% Public Debt Sep-14

Dec-14

Mar-15

Remark : * Include FIDF Debt

18

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Baht Bond Process

Who can apply?

Timeline For Baht Bond Application Process APPLICATION PROCESS: 3 rounds per year (9-mth issuance period for each round)

Baht Bond’s Maturity Profile (Classified by Issuers)

2016 - 2028

Public Debt Management Office, Ministry of Finance

THB Mil.

29

25,000

47

%

%

Non-Gov’t

37,156 THB Mil.

(23,066) MHBK

79,845 THB Mil.

CLMV

8%

Baht

l.

& CGIF

Lao PDR (Government)

(42,689 THB Mil.)

39%

53

(30,656 THB Mil.) 15,000 KEXIM

14

%

(11,133) HANA

10,000

WOORI

7

%

CITI

0

Today

(10,000) KEXIM

%

10

KNM

(8,000)

%

Lao PDR (Gov,t)

EDL-Gen Lao PDR (Gov,t)

5

%

CABEI

WOORI Lao PDR (Gov,t)

%

13

(10,352)

KEXIM WOORI

CABEI Lao PDR (Gov,t)

%

EDL-Gen

(5,668) 5,000

12

International Credit Rating

Size : 3,000 THB Mil. Issue: Sept 28th, 2015

20,000

IFIs ,

(6,500 THB Mi )

Lao PDR (Gov,t)

2

(3,864)

(1,500)

KEXIM

KEXIM

Lao PDR (Gov,t)

KEXIM

4

%

(3,000)

%

EDL-Gen

Lao PDR (Gov,t)

2

%

(1,371) Lao PDR (Gov,t)

2

%

(1,891) Lao PDR (Gov,t)

Source : PDMO (As of 31st March, 2017)

19

2007 - 2017

Growth of Corporate Bond Outstanding has Accelerated

Baht Bond Outstanding

Total Outstanding 11,238,778 THB Mil.

Corporate Bond Outstanding % Share of Corporate Bond Outstanding to Bond Market Capitalization % Share of Baht Bond Outstanding to Bond Market Capitalization

26% 26%

Baht Bond 1%

26%

26%

79,845

79,845 THB Mil

Corp Bond 25%

2,808,789 THB Mil.

0,000

20% 20% 20%

19% 18% 18%

20%

(CGIF 2,780 THB Mil )

27%

THB Mil.

2,808,789 THB Mil 22%

0,000

SOEs Bond 7%

17%

0,000

BOT Bond

12%

29%

3,279,165 THB Mil.

0,000

7%

00,000

2%

GOVT Bond

1.4% 1.4% 1.0% 0.9% 0.7% 0.7% 0.6% 0.9% 1.2% 1.0% 1.1% 0

38%

4,268,561 THB Mil.

-3%

End of March

Source : ThaiBMA (As of 31st March, 2017)

Corporate Bond & Baht Bond Outstanding (Classified by TTMs)

Average size per issuance:

2,047 THB Mil.

THB Mil. 1,500,000

Total Outstanding : Number of Corporate Bond:

49%

Average size per issuance:

48,367 1,207,198

2,583,167 THB Mil. 1,262 (Series) 2,047 THB Mil. Baht Bond Corporate Bond

1,000,000

16%

500,000

7%

11,852

13%

395,940

3,864

10%

330,812

12,372

1,500

260,112

1,891

187,852 TTM (Years)

121,408 0

-

20

5%

Source : ThaiBMA (As of 31st March, 2017)

-

-

-

-

Remark : Excluded Commercial Papers (less than 1 year at issue)

4%

Corporate Bond & Baht Bond Outstanding (Classified by Size)

are 8 Major Corporates

THB Mil. 200000

Corporate Bond CPALL

Outstanding (THB Mil.)

B Rated Group (BBB, BB)

Baht Bond SCG

8

34.3%

10,001 – 50,000

61

52.4%

≤ 10,000

141

13.3%

Total

210

100%

Baht Bond

Lao PDR (Gov’t)

PTT

% Share of Outstanding

≥ 50,001

Unrated

150000

No. of Issuers

A Rated Group (AAA, AA, A)

BahtLaoBond PDR (EDL-Gen)

BAY

100000

Lao PDR (Gov’t) (BBB+) 30,656 THB Mil.

50,000 50000

Lao PDR (EDL-Gen) (BBB+) 6,500 THB Mil.

10,000 0

Issuer 1

Issuer 210

Source : ThaiBMA (As of 31st March, 2017)

Remark : Excluded Commercial Papers (less than 1 year at issue)

51%

Corporate Bond & Baht Bond Outstanding (Classified by Credit Rating) THB Mil. 200000

Corporate Bond

CPALL

Rating

AA Rated A Rated

SCG

BBB Rated

150000

% Share of Outstanding

No. of Issuers

AAA

393,078

15%

13

AA

371,158

14%

25

1,323,175

51%

52

BB Rated

A

Unrated

BBB

378,700

15%

54

BB

32,265

1%

5

Unrated

84,791

4%

61

2,583,167

100%

210

Baht Bond Baht Bond

PTT

Baht Lao Bond PDR (Gov’t) Lao PDR (EDL-Gen)

100000

Outstanding (THB Mil.)

AAA Rated

is A Rated

BAY

Total

Lao PDR (Gov’t) (BBB+) 30,656 THB Mil.

Lao PDR (EDL-Gen)

50000 50,000

(BBB+) 6,500 THB Mil.

10,000 0

AAA AA

Source : ThaiBMA (As of 31st March, 2017)

A

BBB

BB

Unrated

Remark : Excluded Commercial Papers (less than 1 year at issue)

21

Annual Capital Flow classified by GOVT & BOT Bond (2010 – 2017)

62,609 THB mil.

(2017YTD)

THB Mil.

350,000

300,000

250,000

93,249

62,609 THB mil

200,000

.

84,003 150,000

BOT Bond 11.551 THB mil.

23,052 100,000

50,000

196,463

129,454

GOVT Bond 51,058 THB mil.

117,144

11,551

96,738

45,963 29,642

0

-53,807 -50,000

51,058

15,548

0

-71,124

-100,506 -37,994

-100,000

-150,000

2017 YTD Non-resident Net Buy/Sell in BOT Bond Non-resident Net Buy/Sell in GOVT Bond

2017 Weekly

As of 31st Mar, 2017

Net Change in Non-resident Holding (YTD) BOT Bond vs GOVT Bond

(The past 52 weeks)

As o

(1 USD/ THB) THB Mil.

Accumulative NR Holding = 62,609 THB mil.

THB Mil.

150,000

41

(Since 1 Jan – 31 Mar 2017)

125,000

40 100,000

GOVT Bond

39

75,000

51,058

THB mil.

38

50,000

BOT Bond 25,000

37

11,551 THB mil.

0

0

36

-25,000

35

1 USD = 34.49 THB

-50,000

34

-75,000

33 -100,000

32 -125,000

NR Holding in GOVT Bond

Foreign Exchange (USD/THB)

NR Holding in BOT Bond

31

-150,000 WK1

WK2

WK3

WK4

WK5

WK6

WK7

WK8

WK9

WK10

WK11

WK12

WK13

As of 31st Mar, 2017

22

T

2017

Non-Resident Holding in THB Bond = 696,819 THB Mil.

Outstanding

Thai Bond Market Cap. = 11,238,778 THB Mil.

GOVT Bond GOVT Bond

574,063 621,137

BOT Bond Bond BOT

118,177 74,985

SOE Bond Bond SOE

00

Corp Bond Corp Bond

25%

696,819

7.53% % 6.200

692,906

GOVT Bond Outstanding 4,268,561

BOT Bond Outstanding 3,279,165

THB Mil.

THB Mil.

Non-Resident 74,985 THB Mil.

Non-Resident 621,137 THB Mil.

29%

6.24% 5.527% 1.390% 1.28% 0.667% 1.28 0.00% 0.000% 0.01 0.006% 0.01%

697 666

TOTAL TOTAL

7%

% of Thai Thai Bond Bond Market Market Cap. % Share of (9,202,573 THB Million)

Non-Res i dent Hol di ng Non-Resident Holding (THB Mi l l i on) (THB Million)

Issuer Issuer

3,279,165 THB Mil. Domestic Investors

Domestic Investors

38%

3,204,180 THB Mil.

3,647,424 THB Mil.

97.7

85.4

4,268,561 THB Mil.

%

%

As of 31st Mar, 2017

Peers Comparison

Non-Resident Holding in Thai GOVT Bond is 621,137 THB mil. or 14.6 % of Total GOVT Bond Outstanding

Percentage share of Non-resident Holding in Local Government Bond (Mar 2009 - Present)

40%

Indonesia

38.24% Mar’ 16

30%

Malaysia 25.59% Mar’ 16 Peak @ 19.1% (Apr’ 13)

20%

Thailand

14.6%

As of 31th Mar,17

Japan 10.49%

10%

Mar’ 16

Korea 10.49 % Dec’16

2009

Source : AsianBondsOnline, ThaiBMA

2011

2012

2013

2014

2015

2016

Sep-17

Dec-17

Jun-17

Mar-17

Sep-16

Dec-16

Jun-16

Mar-16

Dec-15

Jun-15

Sep-15

Mar-15

Dec-14

Jun-14

Sep-14

Mar-14

Dec-13

Jun-13

Sep-13

Mar-13

Dec-12

Jun-12

Sep-12

Mar-12

Dec-11

Jun-11

Sep-11

Mar-11

Sep-10

2010

Dec-10

Jun-10

Mar-10

Dec-09

Jun-09

Sep-09

Mar-09

0%

2017 As of 31st Mar, 2017

23

Source: Public Sector Development Group, PDMO

Pro-active Debt Management

Develop Domestic Bond Market to be a Sustainable Source of Funding for the Stability of Thailandâ&#x20AC;&#x2122;s Financial System

Foster Strong and Effective Organization

3 PDMOâ&#x20AC;&#x2122;s Strategies

Formulate sound public debt management policies and strategies as well as conduct, monitor and evaluate public debt management operations under the relevant legal framework and guidelines

Mission

Transparency, Discipline, Trustworthiness, Driving Social and Economic Development

Values

Professional in public debt management for sustainable development

Vision

Nantachod Samarnwong

Economist

Sittan Sathianphattanakool

Economist

Nakarin Prompat, Director

Government Bond Market Development Division

Nattakarn Boonsri, Senior Expert

Senior Expert on Bond Market Development

Executive Director

Upama Jaihong

Bond Market Development Bureau

Kittipoom Ounjai

Economist

Wanthanee Phongam

Senior Economist

Phimonphan Tanwattana

Economist

Sujitra Numthong, Director

Fund Management and Bond Market Infrastructure Development Division

Sunee Eksomtramate Executive Director

Pimpen Ladpli

Ekaraj Khuankhunsathid Executive Director

Executive Director

Policy and Planning Bureau

Debt Management Bureau 2

Public Infrastructure Project Management and Evaluation Bureau Acting Executive Director

Phacharaporn Khotnarin

Economist

Sriarpa Ruangruchira

Senior Economist

Puttipong Kanna

Economist

Oraporn Thomya, Director

International Bond Market Policy Division

Executive Director

Jindarat Viriyataveekul Jindarat Viriyataveekul

Public Infrastructure Project Financing Bureau

Legal Advisory Group

Sirasa Kanpittaya

Front Office Middle Office Back Office Support Offic

Siribha Satayanon Secretary

Office of the Secretary

Nakarin Prompat, Acting Director

Financial Product Development Division

Teeralak Sangsnit Executive Director

Payment Administration Bureau

Risk Management Group

Information Technology Center

Public Sector Development Group

Internal Audit Group

Ace Viboolcharern Public Debt Advisor

Public Debt Advisor

Deputy Director-General

Suwit Rojanavanich

Director-General

Deputy Director-General

Debt Management Bureau 1

Theeraj Athanavanich Bond Market Advisor

Bond Market Advisor

For Further Information : Upama Jaihong

upama@pdmo.go.th

Executive Director of Bond Market Development Bureau

Nattakarn Boonsri

nattakarn@pdmo.go.th

Senior Expert on Bond Market Development

Oraporn Thomya

oraporn@pdmo.go.th

Director of International Bond Market Policy Division

Nakarin Prompat

nakarin@pdmo.go.th

Director of the Government Bond Market Development Division

Sujitra Numthong

sujitra@pdmo.go.th

Director of Fund Management and Bond Market Infrastructure Development Division