Kot bond market booklet q3 fy2015

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

Highlights “Financing Thailand’s Future” Mr. Theeraj Athanavanich Deputy Director-General of PDMO

“The Role of PDDF in Bond Market Development” Mr. Paroche Hutachareon Director of Fund Management and Bond Market Infrastructure Development Division

Progress Update

» Total Fund Raising Plan FY2015 » GOVT Bond Auction Schedule Q3/FY2015 » Bond Switching Program Q3/FY2015 » Savings Bond FY2015 » PDMO Bond Calendar FY2015 Basic & Essentials

» Public Debt Outstanding and Its Composition » Bond Market Capitalization and Its Composition » Development of Inflation-Linked Bond » Baht Bond Outstanding and its Market Share » Non-Resident Holding in Domestic Bond Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

Q3/FY2015

Thai GOVT Bond Market Overview Highlight Interviews

“Financing Thailand’s Future” Mr. Theeraj Athanavanich (Deputy Director-General of PDMO)

“The Role of PDDF in Bond Market Development” Mr. Paroche Hutachareon (Director of Fund Management and Bond Market Infrastructure Development Division)

Progress Update 7 9 10 11 12 14

 Total Fund Raising Plan FY2015  GOVT Bond Auction Schedule Q3/FY2015  Bond Switching Program Q3/FY2015  Greenshoe Option: Privilege for MOF Outright PD  Savings Bond FY2015  PDMO Bond Calendar FY2015

Basic & Essentials Public Debt Outstanding (as of Jan 2015) Bond Market Capitalization (as of Mar 2015)

5,658,059 THB Mil. (46.46% of GDP) 9,399,227 THB Mil. (77% of GDP)

18 19

Total GOVT Debt (Direct + FIDF) (as of Jan 2015)

3,996,769 THB Mil. (40 Bond Series)

22

*Including Foreign Debt

Well-Developed Bond Market Improved GOVT Direct Debt Profile Dramatically (as of Jan 2015) » Average-Time-to-Maturity (ATM) 11yrs » Average Cost 3.9% » Well-Balanced Fixed : Floating Ratio 89 : 11 » Well-Distributed Maturity Profile 43:18:39 (<5 : 6-10 : >10yrs)

25

Government Bond Auction Result (as of Mar 2015)

27

Development of Inflation-Linked Bond (as of Mar 2015)

28

Baht Bond Outstanding and its Market Share (as of Mar 2015)

73,574 THB Mil.

Non-Resident Holding in Domestic Bond (as of Mar 2015) » Annual Capital Flow (YTD)  GOVT Bond :  BOT Bond :

-17,361 THB Mil. -9,458 THB Mil. -7,903 THB Mil.

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

29 30

665,901 THB Mil. (7.08% of Thai Bond Market Cap.) 616,025 THB Mil. (16.9% of GOVT Bond Outstanding) 49,077 THB Mil. (1.8% of BOT Bond Outstanding) 799 THB Mil.

1

Mr. Theeraj Athanavanich Deputy Director-General of Public Debt Management Office

The Thai economy faces a challenging year ahead, what role can PDMO play to support economic recovery?

As you are aware, last year the economy grew at a mere 0.7%. This year, the consensus is that economic recovery will be slower than expected. Global economic conditions remain volatile and demand for exports from our key trading partners including US, EU, Japan and China remains relatively weak given slowdown in their economies. Thailand as a nation that depends highly on exports will continue to be affected. The BOT has already cut rates be accommodative but in order to achieve growth at around 3.9 percent, government spending must be the main driver of growth.

To begin with, the government has recognized the need for continuous fiscal stimulus by increasing the budget deficit. Furthermore, they have initiated additional infrastructure investment packages to boost immediate spending and a plan to invest in infrastructure that will increase the country’s productivity in the long term has also been put in place.

PDMO as the sole financing agency, our duty is to ensure funding needs are met entirely, on time and at efficient cost levels. We are also advisors in the frontline of policy making, providing key advice on financial mechanisms to ensure that projects are feasible. Our engagement allows us to have clear policy directions and early reassessments of plans which strengthens our capacity in meeting government financing needs. Therefore, our financing strategy is critical to supporting government stimulus policies.

Can you please give us an update on the current infrastructure plans? Has any progress been made?

For the short term plans, the objective is to look for quick wins that can help boost growth this year.

And we have made progress, just in March this year, the cabinet approved an 80 billion baht package for smallmedium scale infrastructure investment in irrigation and road improvement projects nationwide. The projects are aimed to boost employment and spending in the short run, in which PDMO is preparing to raise 57 billion baht to support project implementation in this fiscal year.

As for the long term transport and logistics investment program, the aim is to lift the country out of the “middle income trap”, enhance the standard of living through creating new growth centers, and supporting connectivity in the region in light of the ASEAN Community end of this year. That is why there are emphasis on enhance the rail network linking Thailand with our neighbors including the upcoming Dawei deep sea port, southern parts of China and beyond.

I’m pleased to see that there has been progress. This year we will see the start of construction in projects like the double track railways towards the south (Prachuap Khiri Khan-Chumpon section) and north east (Thanon Jira-Khon Kaen section) regions as well as, extensions of Bangkok skytrain networks along Mo Chit - Saphan Mai - Khu Khod Section projects. Projects that hae already progressed with disbursements, include NGV buses and aircraft acquisition of 10 billion baht.

2

Financing Thailand’s Future “PDMO as the sole financing agency, our duty is to ensure funding needs are met entirely, on time and at efficient cost levels.”

Any concerns in terms of funding these infrastructure projects?

The government can draw from various founding sources to finance these projects including the budget, funding from government debt, state enterprise revenue/debt as well as participation from the private sector. A general guide in project financing is that annual budget is used in project preparation; construction cost draws from government debt whilst state enterprise and private sector takes part where there is more financial viability. Given such framework, the bulk of funding will draw from government debt, creating a heavy interest burden. Therefore, currently the ministry of finance (State Enterprise Policy office and PDMO) is working closely with the ministry of transport to encourage a bigger role of the private sector in megaprojects and increase their investment proportion from 15 to 20 percent. Possible new PPPs projects under consideration include; the Pink Line monorail or the high speed train to Chiang Mai or Hua Hin. I can say with confidence that funding the projects is not an issue, we are more than ready in this regard but we need to ensure that projects can be expedited as planned. In particular, the government can meet financing needs in the coming years by taking advantage of a more developed bond market. The domestic bond market today has become a sustainable and cost efficient funding source for both the government and state enterprise. We have expanded funding capacity with further reach into a broader base of investors that has resulted from better market infrastructure, improved communication and instrument innovations. Especially now that there is ample liquidity locally and instruments more suited to project financing such as amortized and longer tenor bonds, our bond market today is in good shape to support our investment needs. The bond market is also highly resilient; this means that even during times of political or financial market shocks, government bonds are still fully subscribed at prices lower than the market yield.

Furthermore, our fiscal strength as reflected in the low debt levels and well balanced portfolio composition will allow the fiscal space and favorable terms when borrowing. Currently debt level stands at 46% of GDP, which is well below sustainability ceiling of 60%. Our debt composition is consistent with revenue as 98% is baht denominated debt and refinancing risk is further mitigated with lengthened portfolio of additional 5 years.

What are the mechanisms to ensure effective execution of projects, transparency and credibility with the public?

To ensure a system of check and balance, all projects will need to go through relevant channels of approval and requirements such as feasibility and cabinet approval, while during procurement they are required to comply with budget procurement regulations or the relevant SoE’s, with no exception. Furthermore, innovations in monitoring will be introduced such as the CoST monitoring system that will use Suvarnabhumi phase 2 as the pilot project.

PDMO also has developed its own electronic web application that will enable us to monitor realtime progress and costs of projects that are debt financed. The system is also designed to allow the public to view certain project details and progress, increasing transparency and public involvement in the project monitoring and assessment.

3

Mr. Paroche Hutachareon Director of Fund Management and Infrastructure Development Division

What is the role of PDDF in supporting the domestic bond market?

The issuance of sizeable benchmark bonds consistently (typically over 100 billion baht) and product diversification have been important for our bond market development initiative. However, issuing large size bonds also lead to a significant increase in refinancing risks for the government. That is why we have developed a set of tools to manage this risk which includes 1) Pre-funding within one year prior to maturity date, proceeds is then invested by the PDDF during this period, 2) Debt switch and consolidation (refer to Mr. Boonsriâ&#x20AC;&#x2122;s interview published in the KOT Bond Market Quarterly Bulletin, Q2/F2015 and 3) Bridge financing on the day of maturity (in an amount less than 50 billion baht). This allows the PDMO to depend less on bridge financing on the day of maturity for refinancing. In fact for LB155A that is due on 22 May this year, with an amount of 150 billion baht, 61 billion baht will be drawn from prefunding, 76 billion baht from debt switch and the remaining from budget. This leaves zero chance of a default or refinancing at higher cost on the day of maturity.

Therefore, the Public Debt Restructuring and Domestic Bond Market Development Fund (PDDF) plays an important role in supporting PDMO in bond market development while at the same time help mitigate refinancing risk and even an event of default. In the past, there was in fact a case where political events have prevented financial institutions from participating in auctions and funding obligations could not be met. Had this happen on the day of maturity, it could have led to an event of default. Prefunding and PDDF prevents such event from occurring.

Given that the source of funds is from pre-funding or the issuance of bonds that must be repaid, investment mandate must be quite restrictive?

Yes it is, and from our regular meetings and knowledge sharing with other sovereign funds around the world, we are probably one of the most conservative. But, this is in line with our objective which is capital preservation in order to ensure that the entire amount is transferred back to PDMO for debt repayment. Our investment mandate specifies that over 60 % must be invested in high quality assets in both domestic and foreign markets including government bonds, government backed financial institutions and reverse repo transactions. For investment in foreign currency, the entire amount is fully hedged. Investment in top rated corporate bonds in the domestic market is allowed at no more than 40%.

During the last 4 years we have operated strictly under this mandate, we have managed round 334 billion baht and generated return of over 3 billion baht. This has been used to reduce the taxpayersâ&#x20AC;&#x2122; burden in debt repayment and the budget can be allocated for other economic and social projects. This also means that the fund is self-financed and does not rely on the governmentâ&#x20AC;&#x2122;s annual budget to run its business.

4

The Role of PDDF in Bond Market Development â&#x20AC;&#x153; 3 Billion Baht generated from investment has been used to reduce taxpayers' burden on public debt repaymentâ&#x20AC;?

What are the investment strategies and outlook for this year?

The current AUM is around 61 billion baht from prefunding of LB155A and with the pre-funding of LB15DA to come starting in June in an amount of 70 billion baht, this year we will manage in total around 140 billion baht. All investment will be done through external fund managers including SCBAM, KASSET, KTAM and TFUND. Our asset class as specified in the mandate means that our strategy depends largely on predicting the BOT Policy rate movements. We take into account all macroeconomic issue that may have an impact on the Thai economy and thus policy rates decision by the BOT. For this year, given that the economy is recovering slower than expected, we hope that government spending will be in line with the plan and be the main driver for growth. In our view, we think the BOT will keep rate on hold at 1.75% for this year, unless economic conditions worsen further. This means that the duration will be in line with the investment period and there isnâ&#x20AC;&#x2122;t much room for gains from policy rates movements.

Investment in foreign currency including ECPs and corporate bonds in local market are options for some yield enhancement.

The investment amount is relatively large while the mandate is quite limited, do you have plans to expand the investment universe?

In order to enhance returns from investment, PDDF has been working towards expanding the investment universe. PDDF has already expanded currencies to cover other regional currencies including CNH as China works towards internationalizing the currency and can offer us new options for investment. In the medium term, we have approved plans, subject to legal process, to amend the law to allow the fund to invest in BOT bonds and corporate bonds with credit ratings of A- or equivalent. Enhanced returns with appropriate risk management will allow the government to achieve its objective of supporting bond market development at lower cost.

In the future the size and investment horizon could increase and lengthen further (could be up to 10 years depending on the bond issued), the PDDF can also invest proceeds purely for bonds issued for the purpose of domestic bond market development. This means that when there is no need for the government to borrow, for example during times of budget surplus, the government can continue to issue Benchmark Bonds and the proceeds from issuance will be invested by the fund. Countries including Singapore and Australia have also been issuing bonds for this purpose as they have been running a budget surplus but see the need to maintain the market.

Is there a plan to bring investment in-house?

This is unlikely to happen any time soon. The fund has been operating for around 3 years which is not very long when compared to other sovereign funds. However, we are preparing for the future and consistently strengthening the PDDF in terms of structure and personnel. The external fund managers have been helpful in transferring knowledge and knowhow in asset and risk management process. We also meet with other sovereign funds around the world on a regular basis through the International Sovereign Wealth Funds (last year was held in Doha, Qatar) and through visits at the Future Fund in Australia and the Norwegian Government Pension Fund global in Oslo. All of these meetings have helped us set up a system that is up to international standard with good governance and transparency. Systems have also been put in place to monitor investments by the external fund managers to make sure that it is in line with the investment mandate and risk limit. We are building and when the PDDF grows further, it is possible that there will be both in house investment and external fund managers.

5

Progress Update  Total Fund Raising Plan FY2015

 GOVT Bond Auction Schedule Q3/FY2015  Bond Switching Program Q3/FY2015  Greenshoe Option: Privilege for MOF Outright PD  Saving Bond FY2015  PDMO Bond Calendar FY2015

6

FY 2015

705,XXX THB Mil.

Total Fund Raising Plan

* Include Infrastructure Investment

315,XXX MB

New Borrowing

-TentativeOn-Lending

Deficit

(Pre-Fund)

Savings Bond Promissory Notes and Others

2,XXX 4,XXX

250,XXX

On-Lending Refinance

Roll Over 390,XXX MB

59,XXX

National Catastrophe Insurance Fund Substitution for foreign currency loan

29,XXX

66,XXX

Inflation-Linked Bond

40,XXX

Amortized Bond

55,XXX

445,XXX

Loan Bond

Rollover 209,XXX Govt Debt Rollover FIDF Debt

Benchmark Bond

THB Mil.

5-10-15-30â&#x20AC;&#x201C;50-yrs

350,XXX

86,XXX

By Instruments

By Bills

Benchmark Bonds : 5-10-15-30-50-yrs Inflation-Linked Bonds : ILB 15-yrs Amortized Bond : LBA 25-yrs

ALL FY2015 Government Bond

-TentativeTotal Benchmark Bonds

THB.Mil.

Benchmark Bonds

Auction Size

5-yrs (LB21DA) 10-yrs (LB25DA) 15-yrs (LB296A) 30-yrs (LB446A) 50-yrs (LB616A) ILB (ILB283A) LBA (LBA37DA)

18,000-20,000 12,000-16,000 8,000-10,000 8,000-10,000 8,000-10,000 4,000-5,000 8,000-10,000

445,xxx MB Total

350,xxxMB 95,xxxMB

5

Top-up

300,000

50

In

25

LB616A LB616A

LBA37DA LBA37DA LB383A LB396A LB406A LB416A

LB316A LB326A

LB446A LB446A

Top-up

Top-up

30

Top-up

Top-up LBF14NA LB14DA LB155A LB157A SB15NA LB15DA SB165A LBF165A SBST166A LB167A LB16NA SB16DA LB171A LB175A LB176A LB17OA LB183A LB183B SB189A LB191A LB193A LB196A LB198A LB19DA LB213A LB214A LB21DA LB21DA ILB217A LB22NA LB233A LB236A LB244A LB24DA LB25DA LB25DA

0

15

LB267A LB27DA ILB283A ILB283A LB283A LB296A LB296A

10 100,000

Top-up

15

Top-up

200,000

7

FY 2015

T-Bills Plan Q3/2015

THB Mil. 75,000

Q1

60,000

Q3

Q2

bps 7.5

Q4

6.0

4.5

10,000 MB 10,000 MB 10,000 MB

45,000

30,000

15,000

3.0

1.5

0

0.0 -0.6

-15,000

-0.8 -1.1 -1.4 -1.3

-0.2

-0.3 -0.6 -0.9 -1.1

-0.4 -0.9 -1.9

-30,000

-2.5

-1.5

1 month

-1.5

-3.0

-2.6 -3.2 -3.6

-3.4

-45,000

-4.5

-60,000

-5.3

-5.6

-6.0

-6.4

-75,000

-7.5 Oct-14

8

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

9

5,000

8,000

LB446A 30-yrs

7,000

LB616A 50-yrs

9,000

Total

20,000

LB296A = LBA37DA = LB446A = LB616A =

LB25DA = ILB283A =

LB21DA =

Maturity Date

17-Dec-2021

Re-open

Re-open

1.25%

MOF Outright PD Re-open

12-Mar-2028

(Greenshoe Option)

12-Dec-2025

3.85%

4.26%

Re-open

Re-open

12-Dec-2037

Re-open

22-Jun-2029

4.875%

-

29-Jun-2044

4.675%

17-Jun-2061

4.85%

3.65%

Coupon

108,000

14,000

40,000

Total

8,000

7,000

7,000

24-Jun-2015 19,000

-

17-Jun-2015

5,000

-

20,000

10,000

10-Jun-2015

3-Jun-2015

13,000

10,000

13,000

20-May-2015

27-May-2015

-

13,000

7,000

13-May-2015

6-May-2015

29-Apr-2015

9,000

9,000

LBA37DA 25-yrs Amortized Bond

29,000

9,000

LB296A 15-yrs

22-Apr-2015

13,000

Inflation-Linked Bond

ILB283A 15-yrs

-

20,000

LB25DA 10-yrs

15-Apr-2015

8-Apr-2015

1-Apr-2015

Auction Date

LB21DA 5-yrs Exclusivity

Government Bond Auction Schedule for Q3/FY2015

March 2015 Public Debt Management Office, Ministry of Finance, Rama 6 Rd, Phayathai, Bangkok, Thailand 10400Tel. 0-2271-7999

0-2271-7999ext.5825

Thailandâ&#x20AC;&#x2122;s Bond Switching Transaction for LB15DA in FY2015 The Public Debt Management Office (PDMO), Ministry of Finance, Kingdom of Thailand has successfully introduced bond switching to be used to reduce refinancing risk of the maturing debt. The inaugural bond switching program was launched in November 2014 and was well received by the market. Given the success, PDMO plans to conduct the next switching program in the second half of June 2015. The plan is to switch the outstanding THB denominated source bond due in December 2015 (LB15DA) into a selection of destination bonds which will be announced a few weeks before the transaction date.

The approach under this transaction will be different to the previous transaction as the nominal-neutral method will be used instead of cash-neutral. For nominal-neutral method, the conversion ratio will be 1 to 1 between the source bond and destination bonds.

Any difference in price between source bond and destination bonds will be settled in cash.

For further information please contact: Public Debt Management Office Pimpen Ladpli Executive Director of Bond Market Development Nattakarn Boonsri Director of Government Bond Market Development Pothirat Kitsriopak Economist Tel: +66 2 271 7999 ext. 5807 E-mail: pothirat@pdmo.go.th

Bangkok Bank PCL Montri Upathambhakul Tel: +66 2 626 4434

E-mail: montri.upa@bbl.co.th

10

KASIKORNBANK PCL Supong Ninsuvannakul Tel: +66 2 470 3274

Standard Chartered Bank (Thai) PCL Chanaichon Asavametha Tel: +66 2 724 8836

E-mail: supong.n@kasikornbank.com E-mail: chanaichon.suwansirikul@sc.com

Privilege for MOF Outright PDs In FY2015

Greenshoe Option Series

LB21DA (5-Yr Benchmark Bond .. Exclusivity)

Accepted Rate

Average Accepted Yield (AAY)

Maximum Amount

Additional 20% of the allocated amount

Exercise Period

T (After Auction Period between 11.00-11.30 a.m.)

Settlement Date

T+2 -Done-

-Done-

Greenshoe

Greenshoe 3,803 MB.

0 - 4,000 MB.

0 - 4,000 MB.

LB21DA

LB21DA

LB21DA

LB21DA

LB21DA

LB21DA

1st auction

2nd auction 20,000 MB. 14 Jan 15

3rd auction 20,000 MB. 25 Feb 15

4th auction 20,000 MB. 22 Apr 15

5th auction 20,000 MB. 3 Jun 15

4,000 – 20,000 MB.

3,976 MB.

20,000 MB. 21 Oct 14

Greenshoe

Greenshoe

6th auction

Auction + Greenshoe = 100,000 - 116,000 MB. Greenshoe Option will begin in January 2015 regarding to the readiness of the BOT’s add-on electronic auction system

Greenshoe Option

• •

Well Received by the Market All Primary Dealers Fully Exercised their Rights

FY2015 5-yr Benchmark Bond (LB21DA) Yield & Auction Results 2nd Greenshoe Option

1st Greenshoe Option

% 3.50

3.25

3.00

14 Jan 2015

25 Feb 2015

20%

19%

3,976 MB.

3,803 MB.

14/14

13/14

# of Greenshoe Option used

# of Greenshoe Option used

-1.78 bps

2.75

Yield 2.96% BCR 1.7 AAY 2.946%

-0.65 bps

Yield 2.64% BCR 2.06 AAY 2.6302%

2.50

-0.25

2.00

bps

Yield 2.30% BCR 2.2 AAY 2.3005% 1-Oct-14 5-Oct-14 9-Oct-14 13-Oct-14 17-Oct-14 21-Oct-14 25-Oct-14 29-Oct-14 2-Nov-14 6-Nov-14 10-Nov-14 14-Nov-14 18-Nov-14 22-Nov-14 26-Nov-14 30-Nov-14 4-Dec-14 8-Dec-14 12-Dec-14 16-Dec-14 20-Dec-14 24-Dec-14 28-Dec-14 1-Jan-15 5-Jan-15 9-Jan-15 13-Jan-15 17-Jan-15 21-Jan-15 25-Jan-15 29-Jan-15 2-Feb-15 6-Feb-15 10-Feb-15 14-Feb-15 18-Feb-15 22-Feb-15 25-Feb-15

2.25

11

12

Savings Bond Savings Bond FY2015 No. 2 will be issue on May 11, 2015

Features ThaiBMA Symbol

SB185A

Tenor

3-Years

Coupon Rate (p.a.)

Issue Size Sale period Sale Amount Coupon payment date Maturity date Eligible Customers

Distribution Channels

Coupon rate will be announced within May 10 , 2015 4,000 THB mil.

May 11 â&#x20AC;&#x201C; August 31, 2015 1,000 â&#x20AC;&#x201C; 2,000,000 THB mil.

Paid semi-annually on May 11 and November 11 each year May 11, 2018 Only for retail and non-profit organization such as foundations, Thai Red Cross Society, and the National Council on Social Welfare of Thailand 4 Appointed banks : - Bangkok Bank Public Company Limited - Krung Thai Bank Public Company Limited - Kasikorn Bank Public Company Limited - Siam Commercial Bank Public Company Limited

Structure Shift â&#x20AC;Ś Savings Bond was a Main Instrument for Government funding under the economic crisis

THB Mil. 1,500,000

35%

4Savings %

Government Debt Securities

Bond Outstanding

(Classified by Types of Investors) Household and Non-profit

29

Proportion of Household and Non-profit in Government Debt Securities

% of Investors in Government Debt Securities

%

1,000,000

483,839MB 424,311MB

500,000

381,796MB

366,490MB

Today

4

%

159,174MB 25,000MB

Savings Bond outstanding in Thai bond market

175,316 MB

85,719MB 77,719MB 42,142MB 30,142MB 12,142MB

-0-

(at the end of March 2015)

0%

0

Savings Bond : Safe Haven for Retail Investors A B C D E F

Savings Bond Outstanding at the end of March 2015

175,316 MB (10 Series) 2010

2011

1. SB15NA 2. SB165A

2012

2013

2014

2016 2016

2015

2017 2560

FY2016 Expiration of 3 SB 89,597 THB Mil. (51%) FY2017 Expiration of 2 SB 8,000 THB Mil. (4%) FY2018 Expiration of 2 SB 35,577 THB Mil. (19%) FY2021 Expiration of 1 SB 12,000 THB Mil (8%) FY2024 Expiration of 1 SB 18,000 THB Mil (11% FY2025 Expiration of 1 SB 12,142 THB Mil (7%

2018 2017

2019

2020

2021 2564

2022

2023

2025 2568

2024 2567

The Last SB will be expired in next 10 years (FY2025)

4,000 MB

3,367 MB

3. SBST166A 82,230 MB

4. SB16DA 5. SB175A 6. SB17DA 7. SB189A 8. SB217A 9. SB247A 10. SBST251A

A

4,000 MB

4,000 MB

B 4,000 MB

31,577 MB

C 11,836 MB

D 18,164 MB

E

12,142 MB

F

13

14

Q2

Q1

Mar 2015

Feb 2015

Jan 2015

Dec 2014

Nov 2014

Oct 2014

23

16

9

2

23

16

9

2

26

19

12

5

29

22

15

8

1

24

17

10

3

27

20

13

6

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Quarterly PD Market Dialogue

Auction T-bill

MOF Outright PD Committee : Quarterly PD's Evalution First day of submission for Baht Bond Application (2/2015)

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

First day Issue Special Saving Bond (5y and 10y) : 100,000 MB

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Tue

25

18

11

4

Auction LB446A (30y) : 10,000 MB

24

17Auction T-bill

10

3

24 Auction T-bill

17 Auction T-bill

10

3

27

25

18

11

4

25

18

11

4

28

21

14

13Retail Only

20

7

31

24

17

10

3

26

19

12

5

29

22

15

8

1

6

30

23

16

Auction LB296A (15y) : 9,000 MB

Auction LB21DA (5y) : 20,000 MB ILB283A (15y) : 4,000 MB 28 Roadshow Debt Switch : Announce Destination Bonds

21

14

7

2 Issue Regular Saving Bond 2/2015(3y) : Retail Only 4,000 MB (1 Dec 14 - 31 Mar 15) 9

Auction T-bill

Auction T-bill

Auction T-bill

First day of submission for Baht Bond Application (1/2015)

Auction T-bill

Auction T-bill

Auction T-bill

Auction T-bill

Mon

18

11

4

27

20

13

6

30

23

16

9

2

MPC

26

19

12

5

26

19

12

5

29

22

15

8

1

MPC 25

MPC

Auction LB25DA (10y) : 14,000 MB

Auction ILB283A (15y) : 5,000 MB

Makha Bucha Day

Auction LB21DA (5y) : 20,000 MB

Auction LB296A (15y) : 10,000 MB

Auction LB616A (50y) : 6,000 MB ILB283A (15y) : 5,000 MB

Auction LBA37DA (25y) : 9,000 MB

Auction LB25DA (10y) : 16,000 MB ILB283A (15y) : 5,000 MB

Auction LB21DA (5y) : 20,000 MB

Auction LB446A (30y) : 10,000 MB

New Year's Eve

Auction LB616A (50y) : 9,000 MB

Constitution Day

Auction LB25DA (10y) : 12,000 MB ILB283A (15y) : 4,000 MB

Auction LB446 (30y) : 9,000 MB

Auction LBA37DA (25y) : 10,000 MB

Auction ILB283A (15y) : 4,000 MB

MPC

Auction LB296A (15y) : 8,000 MB LB616A (50y) : 9,000 MB

Wed

New Year's Day

Quarterly PD Market Dialogue

MOF Outright PD Committee : Annual PD's Evalution

Chulalongkorn Day

Thu

PDMO Bond Calendar FY 2015

Public Holiday

Baht Bond 1/FY2015

H.M. the King's Birthday

Last day of submission for Baht Bond Application (1/2015)

Quarterly Macroeconomics Report (FPO)

27

20

13

6

27

20

13

6

Last day Issue Special Saving Bond (5y and 10y) : 100,000 MB 30 Quarterly Macroeconomics Report (FPO)

23

16

9

2

26

19

12

5

28

21

14

7

31

24

17

10

3

Fri

18

11

4

28

21

14

7

30

23

16

9

2

26

19

12

5

28

21

14

7

28

21

14

7

31

29

22

15

8

1

22

15

8

1

24Retail 25 Only

17

10

3

27

20

13

6

29

22

15

8

1

25

18

11

4

Sat Sun

15

Q4

Q3

Sep 2015

Aug 2015

Jul 2015

Jun 2015

May 2015

Apr 2015

4

3

15

22

29

14

21

28

30

23

16

9

2

Retail 1 Only

31

8

26

25

19

12

5

29

22

15

8

1

24

17

10

3

24

7

Auction LB25DA (10y) : 13,000 MB

Auction LB616A (50y) : 7,000 MB MPC

Auction LB21DA (5y) : 20,000 MB LBA37DA (25y) : 9,000 MB

Songkran Festival Day

Auction LB296A (15y) : 9,000 MB

MPC

MOF Outright PD License granted to a new member

MPC

H.M. The Queen's Birthday

MPC

Last day of submission for Baht Bond Application (3/2015)

Mid-year Bank Holiday

Auction LB616A (50y) : 7,000 MB

Quarterly PD Market Dialogue

Auction LB21DA (5y) : 20,000 MB

Auction LB446A (30y) : 8,000 MB ILB283A (15y) : 5,000 MB 27 Auction LBA37DA (25y) : 10,000 MB CGIF MOC Meeting

20

13

6

29

22

15

8

1

18

Coronation Day

Last Day of submission for MOF Outright PD's Application

Songkran Festival Day

Last day of submission for Baht Bond Application (2/2015) First Day of submission for MOF Outright PD's Application

17

Last Day Issue Regular Saving Bond 2/2015(3y) : 4,000 MB

28

27

11

21

20

10

14

13

Quarterly Macroeconomics Report (FPO)

7

6

23

16

9

2

26

30

Auction T-bill

Auction T-bill

Auction T-bill

Visakha Bucha Day

Auction T-bill

Auction T-bill

5

28

21

14

12 Issue Regular Saving Bond 2/2015(3y) : Retail Only 4,000 MB (11 May - 31 Aug 15) 19

Auction T-bill Public Holiday

Auction T-bill

Auction T-bill

Songkran Festival Day

29

22

15

8

1

25

18

11

4

27

20

13

7

6

Chakri Day

31

30

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

2

24

17

10

3

25

18

11

4

28

21

14

7

31

24

17

10

3

26

19

12

5

29

22

Baht Bond 3/FY2015

Buddhist Lent Day

Auction T-bill

National Labour Day (Only Bank closes)

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

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

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

Annual PDMO-Market Dialogue

MOF Outright PD Committee : Final Review

Asarnha Bucha Day

Bond Switching Transaction on LB15DA First day of submission for Baht Bond Application (3/2015)

MOF Outright PD Committee : First Application's Review

15

8

Quarterly Macroeconomics Report 1 (FPO)

Long-term Investor Meeting

Auction T-bill

Baht Bond 2/FY2015

Basic & Essentials  Public Debt Outstanding  Bond Market Capitalization  Total GOVT Debt (Direct + FIDF)  Government Bond Auction Result  Development of Inflation-Linked Bond  Baht Bond Outstanding and its Market Share  Non-Resident Holding in Domestic Bond

16

 Funding Infrastructure Investment  Connecting ASEAN

Domestic Bond Market in Transition

Funding Infrastructure Investment Connecting ASEAN Ongoing Project (2013 - 2016)

Market Deepening Oriented (2010 - 2012)

Market Infrastructure

2,400,000 THB Mil. Long-Term Infrastructure Inv’t

Thai Khem Khang (350,000 THB Mil.)

Full Funding Capacity : 1,150,000 THB Mil.

Regional Connectivity / AEC

Debt Folio Enhancement

2,000,000 THB Mil. Long-Term Infrastructure Inv’t

Water Decree (350,000 THB Mil.)

Sustainable Source of Fund

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

Baht Bond (Foreign Issuers Bond)

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 (1st execution: 28 Nov 14)

Appointed 14 MOF-Outright PD

Strengthening PD system

Activated Public Debt Management Fund

(Exclusivity, League Table, Greenshoes Option)

STRIPS Bond Scripless Retail Savings Bond  Liquidity

Innovation / Product Development

Market Consultation

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

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

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

Re-open ILB 7-yr or Launch ILB-30yr

Electronic Retail Savings Bond (3-5-yr)

STRIPS Transaction

Quarterly PDMO one-on-group “MOF Outright PD” Dialogue

Quarterly PDMO one-on-one PD Dialogue 30

Building Yield Curve / Enhancing Liquidity

Annual PDMO Market Dialogue

Annual PDMO Market Dialogue

15 10 7 5 3

50

20

8 Tenors of Benchmark Bonds

300,000 MB

Liquidity-Oriented

150,000 MB Outstanding Amount 3 5 7 10 15 20

30

50

17

Public debt Outstanding (as of January 2015) = 5.66 THB Trillion (46.46% of GDP) Components of Public Debt 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

Public Debt Outstanding

Units : THB Mil.

2,939,751* 1,057,018 1,068,742 585,623 6,925

5,658,059

Autonomous Agency Debt

0.12% Special Financial Institutions Guaranteed Debt

0.007 THB Trillion

10.35

% 0.59 THB Trillion

*including 76,580 THB Mil. of External Debt

18

Non-Financial

18.89%

GOVT Debt 51.96%

1.08 THB Trillion

2.94 THB Trillion

State Enterprise Debt

GOVT Debt (for FIDF)

18.68% 1.06 THB Trillion Source : Information Technology Centre, PDMO

Bond Market Cap. = 9.4 THB Trillion

GOVT Bond = 3.6 THB Trillion

($118 Bil.)*

($307 Bil.)*

% Share of GDP

Domestic Bond Market Classified by Issuer

140%

128%

121%

120%

105% 100%

77%

80% 60% 24% 40%

Asian Fin. Crisis

20%

12%

Bank Loan /GDP

Equity/GDP

Bond Market / GDP

March2015

0%

Maturity Profile BOT vs GOVT Bond BOT ATM = 6mths GOVT ATM = 9yrs 4mths

11%

80% <1 ≤

*End of Jan 2015

21% 20%

16%

22%

30%

1<yr≤3

3<yr≤5

5<yr≤10

10<yr≤50

End of March 2015

*Source: BOT Exchange rate as End of Mar 2015

Full Capacity* of All Government Funding Instruments

1,150,000 THB Mil. per Year ($35 Bil.)**

* Under favorable market liquidity + using All funding instruments

% 5.25 5.00 4.75

LB 3 yrs LB 5 yrs LB 7 yrs LB 10 yrs LB 15 yrs LB 20 yrs LB 30 yrs LB 50 yrs

150,000 THB Mil. 120,000 THB Mil. 80,000 THB Mil. 80,000 THB Mil. 60,000 THB Mil. 60,000 THB Mil. 30,000 THB Mil. 20,000 THB Mil.

($4.6 Bil.)** ($3.7 Bil.) ($2.5 Bil.) ($2.5 Bil.) ($1.8 Bil.) ($1.8 Bil.) ($0.9 Bil.) ($0.6 Bil.)

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

GBI-EM Global JP Morgan

iBoxx Asia ex Japan Markit

7.9%

Asian Local Markets HSBC

9.3%

8.1%

Benchmark Bond

Last Update : Mar 2015

4.50 4.25

50

4.00 3.75

30 20

3.50 3.25

15

The “Missing Composition” of Leader role in the Bond Market

3.00

Government Funding Instruments

2.75

7

2.50

5

2.25

2.00

3

10

Infrastructure

liquidity Benchmark Bond

1.75

($18.4 Bil.) ($3.1 Bil.) ($3.1 Bil.) ($2.5 Bil.)

Benchmark Bond

~600,000THB Mil. (52%)

Savings Bond

~100,000THB Mil. (8%)

Amortized Bond

~100,000THB Mil (8%)

Inflation-Linked Bond

~80,000THB Mil. (7%)

($1.2 Bil.) ($0.9 Bil.) ($6.1 Bil.)

Promissory Note

~40,000THB Mil. (4%)

($35 Bil.)

Total

Floating Rate Bond Bank Loan

~30,000THB Mil. (3%) ~200,000THB Mil. (18%)

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

TTM Source: ThaiBMA Government Bond Yield Curve (End of Mar 2015)

**Source: BOT Exchange rate (End of Mar 2015)

19

FY2008-FY2014 Key Success Indicators

1. Trading Volume 3. Demand Concentration

Benchmark Bond 5 yrs and Below : Highest secondary trading volume in every year Unit: % Share of Market Trading Volume

5-yr Benchmark Bondâ&#x20AC;&#x2122;s Higher Turnover Ratio : Even the higher outstanding size, turnover ratio is still more than 2 times Unit: Times

LB155A LB133A

29%

28%

27% 9

21%

20%

20%

26%

LB145B 4.2 LB133A

3.1

1.5

7% FY07

FY08

2. Turnover Ratio 4. Auction Price

FY09

FY10 FY11

FY12

FY13

FY14

FY07

FY08

LB15DA

4.2

FY10

FY11

LB196A LB196A

2.9

2.8

2.4

FY09

LB176A

FY12

FY13

3.2

FY14

Top 10 GOVT Bond Series : Accounted for 90% of all GOVT bond trading volume in secondary market

Well-Developed Benchmark Bond Pays Off : Even with greater size of issuance, the cost of funding is still at market rate

Unit: % Share of Secondary Trading Volume

Unit: USD Bil. +0.9 bps

90% 90%

75% FY07

76% FY08

77%

80%

92%

+1.4 bps

84%

12.8

FY10

15.9

13.7

FY11

FY12

FY13

FY14

FY08

-0.2 bps

-0.4 bps FY09

To be Updated

20

16.5

14.6

223363 +1.2 bps

7.5 7.5 FY09

+3.2 bps

14.7

FY10

FY11

FY12

FY13

-2.7 bps FY14

FY 2012-2016

FY 2011

FY 2007-10

FY2007 – FY2016

Innovation of GOVT Debt Securities

30-yr Benchmark Bond

• Lengthen average-time-to-maturity of Total Government Debt Portfolio • Meet Long-term investors’ demand

Floating Rate Bond

• Increase floating debt ratio of Total Government Debt Portfolio • 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 Benchmark Bond

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

10-yr Inflation-Linked Bond (ILB)

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

Electronic Retail Savings Bond

• Lower Minimum Amount to Purchase / Offer throughout the year • Develop the retail bond into an electronic form  Scripless System • Can be purchased via ATM, in addition of Bank Retail Branches

Amortized 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

Upgrade PD Privileges

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

PDDF Activated

15-yr ILB 30-yr ILB

(Public Debt Restructuring and Domestic Bond Market Development Fund)

CGIF Activated

Baht Bond

(Credit Guarantee and Investment Facility)

Equilibrium of Domestic Bond Market Issuers

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

Credit Rating

• 98 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) CGIF 0.03%

Baht Bond 1%

BBBNon-rated 2% 33%% 2%

1%

Government

24%

38%

AA 55%% AA

4% BOTBOT 4% 6%

BOT

9%

Source : ThaiBMA (End of March 2015)

BOT BOT BOT

30 % 30 28%%

28% Total of 9.3 THB Trillion

38 37 38%%%

AAA 4%

SOEs SOEs SOEs 8%8%

SOEs

Government Government

AA 5%

Government Debt Securities (Classified by Types of Investors) Household and Non-profit

A A 8% A 11 11%%

Corp Bond

9%

Domestic Bond Market (Classified by Credit Rating)

Total of 9.3 THB Trillion

Source : ThaiBMA (End of March 2015)

NR NR 17% 18%

Depository Insurance Corporation and Other Corporation % %

33 36

Insurance and Depository OtherCorporation Corporation

41 33% % Total of 3.5 THB Trillion

Source : BOT (End of February 2015)

21

Tier 1 > 100,000 THB Mil. in Size (80% of Trading Volume)

Total GOVT Bond = 40 Series (End of March 2015)

Tier 2 > 50,000 THB Mil. in Size

THB Mil. 350,000

(19% of Trading Volume)

FY2015 Q2 Market Share of Trading Volume in Secondary Market Tier 2 Tier 1

Tier 1: >100,000MB (10 Series)

300,000

80%

19%

1%

Outstanding size (THB Mil.)

5 0

250,000

50

100

Tier 2: 50,000 – 100,000MB

200,000

(16 Series)

LBA 25 150,000

50 15

ILB 15

100,000 100,000

30

10

LB267A LB24DA LB175A LB316A LB171A LB214A LB19DA LB157A LB244A LB22NA LB183A LB406A LB396A LB383A

LB416A LB183B LB446A LB446A LB155A LB17OA LB27DA LB25DA LB25DA LB193A LB213A LB326A LB191A LB283A LB16NA LB198A LB167A LB233A

0

LB196A LB21DA LB21DA LB176A LB236A LBA37DA LBA37DA LB616A LB616A LB15DA LB296A LB296A ILB283A ILB283A ILB217A

50,000

FY 2015 on-the-run Benchmark Bond

FY 2015 on-the-run Innovative Bond

Source : ThaiBMA

Well-Distributed Bond Maturity Profile

The outstanding size of loan bond maturing in the next 5 years

(End of March 2015)

is 1,371,009 THB Mil. (42% of Total GOVT Bond)

THB Mil.

Current Outstanding ≥ THB 100 Bil. Current Outstanding = THB 50-100 Bil. Current Outstanding ≤ THB 50 Bil.

350,000

FY 2015 on-the-run Benchmark Bond FY 2015 on-the-run Innovative Bond

300,000

5 250,000

200,000

LBA 25 150,000

ILB

50

15

15 100,000 100,000

30 10

1

22

Source : ThaiBMA

2

3

4

5

6 – 10 years

11 – 50 years

LB616A LB616A

LB267A LB27DA ILB283A ILB283A LB283A LB296A LB296A LB316A LB326A LBA37DA LBA37DA LB383A LB396A LB406A LB416A LB446A LB446A

LB25DA LB25DA

LB155A LB157A LB15DA LB167A LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A LB198A LB19DA

TTM0

LB213A LB214A ILB217A LB21DA LB21DA LB22NA LB233A LB236A LB244A LB24DA

50,000

FY2015 Secondary Trading Volume

Top 10 Turnover Ratio includes 4 series of on-the-run Benchmark Bond ( 5-10-15-30-yr )

Classified by Turnover Ratio As of March 2015

THB Mil.

Turnover Ratio 1.8

350,000

300,000

12 GOVT Bond series are included in JPMCB Index

1.6 1.61.6

3 of which are on-the-run Benchmark Bond (5-10-15-yr)

Current Outstanding ≥ THB 100 Bil. Current Outstanding = THB 50-100 Bil. Current Outstanding ≤ THB 50 Bil. FY 2015 on-the-run Benchmark Bond

1.6

FY 2015 on-the-run Innovative Bond

1.4 1.3

Bond Switching : Source Bond

1.4

GBI-EM Thailand - JPMCB

250,000

Turnover Ratio (time)

1.2

1.2 1.11.0

200,000

1.0

0.8

150,000

0.6

0.6 100,000 0.4 50,000

0.4 0.3 0.20.2 0.20.2

0.2 0.20.1 0.10.1 0.10.1 0.10.1 0.0

LB176A LB196A LB155A LB25DA LB21DA LB15DA LB191A LB236A LB296A LB446A ILB217A LB193A ILB283A LB17OA LB16NA LB233A LB27DA LBA37DA LB167A LB175A LB406A LB171A LB616A LB183B LB316A LB24DA LB416A LB157A LB283A LB183A LB22NA SBST166A LB326A SB15NA LB267A SB165A SB175A LB213A LB244A SB16DA SB189A LB198A LB19DA SB247A SB217A LB214A LB383A LB396A SB17DA SBST251A

0

BS 10 5 BS

15 30

15

Turnover Ratio 0.1 – 2.0

25

50

Nearly No Trading

Source : ThaiBMA

23

Keep our word… to get investors confidence for the plan 1,250,000

Unit : Million Baht Lower-than-expected disbursement of Water Decree

Lower-than-expected disbursement of Water Decree

1,000,000 Delay of Infrastructure Investment Plan

Economic Recovery

750,000

756,xxx MB

Higher-than-expected revenue collection

Stimulus package to ease: US financial crisis

-6%

500,000

-1% 0% 250,000

0

+5%

-3%

+2%

Plan Actual

Plan Actual

Plan Actual

Plan Actual

Plan: Actual:

Announced Government’s funding need at PDMO’s Annual Market Dialogues in September Actual fund raising at the end of fiscal year (calculated from announced auction)

--------------

The difference between ‘’the announced’’ and ‘’the actual’’ supply of benchmark bond (% share)

Plan

Actual

Plan Actual

Benchmark Instruments are Benchmark Bonds : Standard Loan Bond (LB) tenors 5-10-15-30-50yr (in FY 2014) + Innovative Products : Inflation-linked Bond (ILB) + Amortized Bond (LBA) Regular issuance/ Consultation with PDs/ Pre-announced auction table

Other Instruments : Saving Bond, Floating Rate Bond, Promissory Notes, Bills and Bank Loan

24

 Average-Time-to-Maturity (ATM) = 9yrs 4mths  Average Cost = 3.94%  Fixed : Floating = 88 : 12 As of Jan 2015

Total Domestic GOVT Debt = 3.92* THB Trillion * Excluding 76,580 THB Mil. of Foreign Debt

Assumptions : 6 months BIBOR = 2.29%, 6 months Fixed Deposit Rate = 1.35%, Inflation = -0.41%

   

FIDF 3

300,000

GOVT Debt (for FIDF) = 1,057,018 THB Mil.

128,000

60%

Maturity Profile

33%

7% 10 yrs + 0

0

0

6-10 yrs 0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Next 5 yrs 0

0 0

47,000 28,198

71,000

40,000 69,000 0

101,800

37,900

94,763 25,000

67,537

31,440 6,731

0

39,836

100,000

141,963

126,850

200,000

= 4yrs 8mths = 3.93% = 84: 16 = 15%

ATM Avg. Cost Fixed : Floating Callable

0

FIDF 1

TTM Fiscal Year

18% 18% 6-10 yrs

0

0

0

0

27,800

0

0

0

29,800

0

0

58,000 12,000

0

95,936

20,000

13,000 130,985

5,500

6,500

0

0

33,581 35,000 0

2,200

41,900

24,700 110,512

224,798

0

59,141

43,000

79,675 18,900

50,664

Next 5 yrs

Maturity Profile 39% 39%

10 yrs +

138,902

43% 44%

= 11yrs = 3.94% = 89: 11 = 9%

0

ATM Avg. Cost Fixed : Floating Callable

0

   

Water Decree

0

On-lending Loan

0

TKK

20,000 217,522

11,836 100,872

381,367

4,750

144,540

158,348

164,297

156,997

100,000

0

T-Bill

GOVT Direct Debt (exclude FIDF) = 2,863,171** THB Mil. 16,000 13,093

200,000

939 60,000

300,000

86,630 28,597 10,000

Budget Deficit

TTM Fiscal Year

ebt

25

FY2015

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

T-Bill Auction Result

THB Mil.

bps

75,000

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

7.5

51,090

50,000

5.0 42,510

41,478

41,710

37,020 34,117

-0.3

-0.6

-0.8 -1.1

-0.9

-1.1

-1.4 -1.3

24,205

2.5

20,000

20,000

20,000

20,000

9,014

20,000

15,000

10,000

20,000

20,000

20,000

15,490

15,000

8,710

30,444

27,650 25,470 24,914

17,500

15,000

1.7

15,000

15,000

15,000

15,000

10,000

15,000

15,000

15,000

0.3

15,000

0.5

15,000

15,000

15,000

T-1= 00

15,000

1.5

22,205

18,550

17,640

15,000

20,000

24,930 22,578

15,000

24,320 21,630

15,000

25,110 21,233

10,000

20,425

10,000

25,000

31,634

29,870

30,260

7,010

27,636

33,470

29,815 29,680

0.0

-0.2

-0.4

-0.6

-0.9

-1.1 -1.5

-1.5 -1.4

-1.7 -1.9

-25,000 -2.5

-2.6

-2.5

-2.6 -3.4

-3.2 -3.6

-50,000

-5.0 -5.3

-5.6 -6.4

-75,000

-7.5

Oct

Nov

OCT

26

Dec

NOV

DEC

Jan

JAN

FEB

Feb

MAR

APR

Mar

MAY

JUN

FY 2015 Government Bond Auction Result

GOVT Bond Auction is decoupled from political situation

Classified by Quarterly Auction Schedule Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Inflation-linked Bond Amortized Bond Participated Amount (Excess Demand) Not Fully Allocated or Subscribed Spread [AAY-Yield (T-1)]

11th Mar 2015

MPC Announcement

bps

THB Mil.

100,000

20.0

75,000

15.0 10.53

50,000

44,090

6.04

34,055

28,293

3.93

25,000

3.35

17,026 22

T-1= -0

5.93

8.92

30,164

10.0

41,142

20,000

4,350 4,000

7,978

3,028 5,972

6,525 4,000

2.61

13,950

7,600

4,030 5,970

9,000

12,000

4,000

16,085

9,000

1,802

14,194

15,275

5.0

17,766

5,212 3,788

9,000

23,976

14,198

562 4,438

9,000

6,000

5,000

6,160

1.51

23,803

10,000

12,010 5,000

14,000

1.32 -0.25

-0.41

-1.14

-1.78

10,725

3,840

-25,000

-3.63

0.0

6.04

-0.91

-1.40

-5.0

-6.75

3.93 -5.21

-5.56

-50,000

-10.0 -9.79

-75,000

-15.0

25 Mar 2015

18 Mar 2015

03 Mar 2015

25 Feb 2015

18 Feb 2015

11 Feb 2015

11 Feb 2015

04 Feb 2015

21 Jan 2015

21 Jan 2015

14 Jan 2015

07 Jan 2015

17 Dec 2014

09 Dec 2014

03 Dec 2014

03 Dec 2014

26 Nov 2014

19 Nov 2014

12 Nov 2014

29 Oct 2014

29 Oct 2014

21 Oct 2014

-100,000

21 Oct 2014

-15.49

-20.0

FY 2015 GOVT Bond Auction Results Classified by Tenor Benchmark Bond 5 – 10yr

THB Mil.

Benchmark Bond 15 – 50yr

10yr

5yr

15yr

30yr

Bps

50yr

(Exclusivity)

48,066

50,000

20 44,945 15

34,055 30,164

28,293

25,000

10 3,976

3,803

1,802 3.9

5.9

T-1= -0

-0.2

12,000 14,198 14,000

-0.6

-1.4

-1.8

7,978

8.9

6.0 9,000

6,160

1.3

5 2,978

9,000

15,275

10,725

3,840

200 20,000 20,000 20,000

17,026 16,085

13,950

9,000

10,000

-0.4

6,022

1.5

5,212 3,788

6,000

0

-0.9 -5

-3.6 -5.6 -25,000

-10 -9.8

-50,000

Short-term Benchmark Bond (<10 yrs) Long-term Benchmark Bond (>10 yrs) Greenshoe Amount Not Fully Allocated or Subscribed Average Accepted Yield

-15

-20

27

Over 100 THB Billion Outstanding Size since 9th November 2014

Development of ILB217A

ILB217A

3.0%

Coupon : 1.20%

2.55% 2.35%

2.5%

2.19%

(as of 3rd Feb 2015)

2.0%

1.5%

1.30%

1.20%

1.0%

0.0% 5,000

+10,000

90,872

77,180

40,000

40,000

70,000

0.5%

55,000

+13,692 +15,000 +7,180 +15,000

100,872 (9th Nov 2014)

Daily Trading Volume (Units: million THB)

2,500

ILB283A

2.75%

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Over 100 THB Billion Outstanding Size since 18th March 2015

Development of ILB283A 3.0%

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

0

Coupon : 1.25%

2.66%

2.5%

2.14%

(18th Mar 15) 2.0%

1.5%

1.24%

102,630 (18th Mar 15)

69,160

74,160

5,000

97,068

64,160

5,000

92,068

+3,570

+4,438 +5,000

87,630

+5,000

83,630

+5,000

79,630

+4,160

+4,000 +1,900 +4,000

77,730

+5,000

60,000

0.0%

55,000

40,000 +15,000 Syndication

40,000

0.5%

55,000

1.0%

Daily Trading Volume (Units: million THB)

2,500

28

Mar-15

Dec-14

Sep-14

Jun-14

Mar-14

Dec-13

Sep-13

Jun-13

Mar-13

0

Linking CGIF & BAHT BOND to the Development of Bond Market 10,000

Total Outstanding 9,399,227THB Mil.

CGIF

9,000 8,000 7,000

5,000

2,850

4,000

Baht Bond

Inaugural (Noble, Hong Kong)

6,000

BAHT BOND

End of March 2015

1%

(Foreign Issuers Bond)

(For Asian Bond 0.03% CGIF Market Initiative)

THB Mil.

3,000 2,000 1,000

Corp Bond

24%

SOEs Bond

9%

Inaugural (EDL-Gen, Lao PDR)

73,574 THB Mil.

Updated: In 2014, Laotian Corporate (EDL-Gen) issued 6,500 THB Mil. of 5-year, 7-year and 10-year baht bonds, with 4.95%, 5.20% and 5.45% of interest rate, respectively.

0

2013 2014 2015 2016 2017 2018 2019 2020

BOT Bond

Inv’t Grade

IBRD

111111 Natural Hedging

2

KEXIM (30,700 MB)

28%

Hana (18,000 MB)

CABEI

Woori (13,000 MB)

Targeted Industry

GOVT Bond

IBK

38%

(12,300 MB)

ING (10,000 MB)

Citi

ADB

(10,500 MB) (11,553 MB)

What next?

Why now?

 Broadening Issuer Base : CLMV

91,374 THB Mil.

THE OUTSTANDING BAHT BOND

(Cambodia, Lao PDR, Myanmar and Vietnam)

 Entering ASEAN Economic Community (AEC)

 Becoming bond market leader of the region

(PDDF.)

Classified by issuers based on TTM

73,574 THB Mil.

Baht Bond Outstanding (as of March 2015)

IFIs

1%

(1,000 THB Mil.)

THB Mil.

Laotian Issuers

30,000

22

Korean Issuers

%

28%

(16,090 THB Mil.)

(22,409) 20,000

22% (17,400)

Others

NOBLE

27%

AFD CBA

50%

(36,500 THB Mil.)

(19,984 THB Mil.)

ING

11%

CABEI

10,000 CA-CIB KEXIM

Hana

IBK 0 2015

KEXIM

(9,066)

7%

8%

6%

7%

KEXIM

(6,330)

Woori

Woori EDL-Gen

KEXIM

CABEI KEXIM EDL-Gen

(1,500)

ADB

Lao PDR

Lao PDR

Lao PDR

Woori

Lao PDR

KEXIM

2016

2017

2018

2019

2020

2021

2022

(5,668) Woori Lao PDR

CITI

Hana

CABEI

Korean Issuers

Laotian Issuers

(5,000)

(5,701)

IFIs

3%

2%

4%

2%

(2,800)

(3,000)

KEXIM

EDL-Gen

KEXIM

2023

2024

2025

(2,000) Year

Others

Source : PDMO (as of March, 2015)

29

Annual Capital Flow classified by GOVT & BOT Bond (2007 â&#x20AC;&#x201C; 2015)

-17,361 THB Mil. (2015YTD)

THB Mil.

350,000

250,000

-17,361

+93,249

THB Mil. +84,003

150,000 +23,052 +196,463 +129,454

50,000

0 -50,000

+30,216 -22,494

-2,793

+117,144

+96,738

GOVT Bond 29,642

-1,598 -7,506

-53,807

-27,157

-100,506

-9,458 THB Mil. BOT Bond

-7,903 THB Mil.

-150,000

2015 YTD Non-resident Net Buy/Sell in BOT Bond Non-resident Net Buy/Sell in GOVT Bond End of Mar, 2015

2015 Weekly

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

(The past 12 weeks)

As o

THB Mil.

50,000

T 40,000

30,000

20,000

10,000

0

0

BOT Bond -7,903THB Mil.

-10,000

(27th Mar 2015)

GOVT Bond

-9,458THB Mil.

-20,000

(27th Mar 2015)

-30,000

-40,000

30

WK12

WK11

WK10

WK9

WK8

WK7

WK6

WK5

WK4

WK3

WK2

WK1

-50,000

End of Mar, 2015

2015

Non-Resident Holding in THB Bond = 665,901 THB Mil.

Outstanding

Thai Bond Market Cap. =9,399,227 THB Mil.

Baht Bond

1%

(Foreign Issuers Bond)

CGIF Market Initiative) 0.03% (For Asian Bond

GOVT Bond GOVT Bond

574,063 616,025

BOT Bond Bond BOT

118,177 49,077

SOE Bond Bond SOE

0-

Corp Bond Corp Bond

665,901

7.53% 7.08%

692,906

24%

GOVT Bond Outstanding 3,634,417

9%

SOEs Bond BOT Bond

6.24% 6.55% 1.390% 1.28% 0.52% 1.28 0.00% 0.01 0.01% 0.01%

799 666

TOTAL TOTAL

Corp Bond

% 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

2,701,591

THB Mil.

Non-Resident 49,077 THB Mil.

Non-Resident 616,025 THB Mil.

28%

BOT Bond Outstanding

THB Mil.

%

%

2,701,591 THB Mil. GOVT Bond

Domestic Investors

Domestic Investors

38%

2,652,514 THB Mil.

3,018,392 THB Mil.

98.2

83.1

%

%

3,634,417 THB Mil.

End of Mar, 2015

Peers Comparison 40%

Non-Resident Holding in Thai GOVT Bond is 616,025 THB Mil. or 16.9% of Total GOVT Bond Outstanding

Indonesia

Percentage share of Non-resident Holding in Local Government Bond (Mar 2008 - Present)

38.13% Dec’ 14

Malaysia 31.85%

30%

Sep’ 14

Peak @ 19.1% (Apr’ 13)

Thailand

16.9%

20%

As of 27th Mar,15

Korea 10.59%

10%

Sep’14

Japan 8.85%

Dec-14

0%

2008 Source : AsianBondsOnline, ThaiBMA

2009

2010

2011

2012

2013

2014

Mar-15

Sep’ 14

2015

End of Mar, 2015

31

Mission

Transparency, Discipline, Trustworthiness, Driving Social and Economic Development

Values

Professional in public debt management for sustainable development

Vision

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

Source: Public Sector Development Group, PDMO

32

Debt Management Bureau 2

Phimonphan Tanwattana

Sittan Sathianphattanakool

Economist

Wanthanee Phongam

Economist

Siree Jongdee

Senior Economist

Chakrit Phothisuk

Economist

Puttipong Kanna

Economist

Chotika Uesampantakit

Economist

Nakarin Prompat, Acting Director

International Bond Market Policy Division

Executive Director

Acting Executive Director

Fund Management and Bond Market Infrastructure Development Division

Jindarat Viriyataveekul

Anchana Wongsawang

Public Infrastructure Project Management and Evaluation Bureau

Pimpen Ladpli

Public Infrastructure Project Financing Bureau

Acting Executive Director

Bond Market Development Bureau

Paroche Hutachareon, Director

Pimpen Ladpli, Senior Expert

Nattakarn Boonsri, Director

Economist

Sunee Eksomtramate Executive Director

Policy and Planning Bureau

Theeraj Athanavanich

Ace Viboolcharern

Bond Market Development

Executive Director

Government Bond Market Development Division

Executive Director

Wisut Chanmanee Teeralak Sangsnit

Debt Management Bureau 1

Deputy Director-General

Deputy Director-General

Front Office Middle Office Back Office Support Office

Ekaraj Khuankhunsathid Secretary

Office of the Secretary

Pothirat Kijsriopak

Economist

Chanikarn Chaiyasena

Economist

Sophida Sritomya, Director

Financial Product Development Division

Sirasa Kanpittaya Executive Director

Payment Administration Bureau

Information Technology Center

Legal Advisory Group

Public Sector Development Group

Internal Audit Group

Wisut Chanmanee Acting Bond Market Advisor

Bond Market Advisor

Ace Viboolcharern

Director-General

Acting Public Debt Advisor

Public Debt Advisor

For Further Information : Pimpen Ladpli

pimpen@pdmo.go.th

Senior Expert on Bond Market Development Acting Executive Director of Bond Market Development Bureau

Nattakarn Boonsri

nattakarn@pdmo.go.th

Director of Government Bond Market Development Division

Sophida Sritomya

sophida@pdmo.go.th

Director of Financial Product Development Division

Paroche Hutachareon

paroche@pdmo.go.th

Director of Fund Management and Bond Market Infrastructure Development Division

Nakarin Prompat

nakarin@pdmo.go.th

Acting Director of International Bond Market Policy Division