PTT Global Chemicals (PTTGC) listing of $1 billion
senior unsecured notes on the Singapore Exchange is the largest
single-tranche US dollar bond offering by a Thai corporate.
Earlier this year its affiliate, major Thai corporate PTT
Public Company which has an interest in innovative financial
instruments, became the first non-financial institution in
Thailand to issue a hybrid.
Although Thai financial institutions have been very active
in the bond market, PTTGCs issue late last month signals
Thai coprorates interest in US-dollar denominated
For Thai credit, what set the PTTGC deal apart is that
most of the other September deals involved financial
institutions: Bangkok Bank did another issue following an issue
two years ago, Siam Commercial Bank tapped its existing bonds
and Kasikornbank tapped its MTN programme, said Posit
Laohaphan, counsel at Latham & Watkins who represented
But PTTGCs short corporate history posed a challenge
to the offering. The company was formed via the
amalgamation of PTT Chemical Public Company and PTT
Aromatics and Refining Public Company, which completed in
Latham & Watkins partner Timothy Hia said that counsel
had to pull together a coherent discussion on the
companys track record to give investors a good sense of
its business, and what it is looking at going forward.
Because the company had just been formed, there was a focus
on appropriate presentation of its business and strategic
direction, Laohaphan said. Although PTTGCs predecessor
companies had tapped the capital markets, this time was a fresh
Moreover, the US-denominated bonds required disclosure in
accordance with rule 144A. Viroj Piyawattanametha, partner at
Baker & McKenzie who advised PTTGC on Thai law, said that
most of the complications involved the disclosure
More complex instruments ahead
This year has been a banner year for Thailands bond
market. Deal counsel predict issues similar, as well as more
complex instruments ahead..
Piyawattanametha said that the firm has been in discussions
with a number of corporates and they are very interested in
launching international issues.
If the international interest market is still in
favour of the issuers, I expect more and more Thai companies
will tap US markets, especially because infrastructure demands
in Thailand mean that Thai project owners need US
dollars, he said. One of the easiest ways to obtain
US dollars is of course to issue US-dollar denominated
Laohaphan agreed that as long as conditions for
investment-grade debt issuances remain favourable, names that
have already been in the market will continue to participate.
However he noted that there are opportunities for newer names
Although the markets are quickly developing, today only a
few Thai companies have the capacity to issue innovative
instruments. Hia said that he expects more offerings by
companies of the scope and scale of the PTT Group.
PTT is one of the corporates with the profile and
business to be looking at more complex structures, although the
market is still relatively new when it comes to this sort of
deal, he said. Larger corporates are better
equipped to navigate some of the issues that come with
complicated structured issues.