The first inflation-linked bond by the Kingdom of
Thailand should spark copycat deals. But slow buy-in from
regulators was just one of the challenges of bringing the deal
Thailand’s BT40 billion ($1.33 billion) 10-year
bond closed to institutional investors last week and to retail
investors on Wednesday. It was the first inflation-linked bond
sale in south-east Asia and the first to generate demand
through book-building, as opposed to auction.
However, a lack of buy-in from Thai regulators
almost derailed the bond issue at the outset.
Bank of Thailand’s pre-deal
regulations classified inflation-linked products as structured
products. In doing so, it prevented many asset managers from
investing in the instrument.
Thailand’s Office of the Insurance
Commission (OIC) had provisions in place that prevented
domestic insurance companies from buying into an indexed