JBICI Research Paper No. 35

The Structured Bond Market in Thailand

April 2007

JBIC InstituteJapan Bank for International CooperationJBICI Research Paper No. 35

The Structured Bond Market in Thailand

April 2007

JBIC InstituteJapan Bank for International CooperationJBICI Research Paper No. 35
Japan Bank for International Cooperation (JBIC)
Published in April 2007
© 2007 Japan Bank for International Cooperation
All rights reserved.
This Research Paper is based on the findings and discussions of the JBIC. The views expressed in thispaper are those of the authors and do not necessarily represent the official position of the JBIC. No
part of this Research Paper may be reproduced in any form without the express permission of the
publisher. For further information please contact the Planning and Coordination Division of ourInstitute.

Foreword

10 years have passed since the Asian financial crisis in 1997. During that period,
East Asian countries have grown steadily, overcoming various difficulties such as
SARS, Avian flu, and soaring oil price. As one of the factors underpinning this growth,
the progress of regional cooperation and economic integration could be highlighted. On
the trade and investment front, MNCs have expanded their production anddistribution network in East Asia while a number of Economic Partnership
Agreements (EPA) and Free Trade Agreements (FTA) have been concluded across theregion. Meanwhile, on the monetary and financial front, various initiatives have been
undertaken especially in the forum of ASEAN+3 Finance Ministers’ process, as known
by Economic Review and Policy Dialogue (ERPD), Chiang Mai Initiative (CMI), Asian
Bond Markets Initiative (ABMI).
Among others, ABMI has been vigorously promoted as an important policy agenda
among the ASEAN+3 countries, which aims to mitigate the maturity and currency
mismatches in financing and facilitate the use of Asia’s high savings for investments in
Asia by developing the bond markets. JBIC has actively contributed to this ABMI. InThailand where a large number of Japanese firms have invested for their business
operations and there exists a relatively developed bond market in ASEAN, JBIC has
conducted various attempts to diversify and deepen her bond market by issuing baht
denominated bond and extending guarantee to the baht denominated bonds issued by
Japanese subsidiaries.
In order to further develop the bond markets in Asia, attention has been recently
paid to the initiatives to diversify the bond products and bond issuers, particularly the
structured bond market such as securitization and infrastructure bond. This research
paper aims to unveil the snapshot of structured bond market in Thailand (including
government policy, legal and regulatory framework, and market infrastructure) andthe impediments to its market development perceived by the market participants, andto make a policy recommendation, so that the structured bond market could be
developed further. We hope that this research paper would be of any help to deepen the
deliberation on the development of bond markets in Asia.
Last but not least, we would like to express our sincere gratitude to those people
from the relevant organizations both in Japan and abroad for their extensive support
and cooperation rendered to us in conducting this research.
April 2007
Izumi Arai
Executive Director
JBIC Institutei《Research promoters from JBIC》
Satoshi Nakagawa,Task Leader, ABMI Task Force, Japan Bank forInternational Cooperation

Suk Hyun,

Bond Market Specialist, ABMI Task Force, Japan
Bank for International Cooperation《Authors of the research paper》
The Thai Bond Market Association (TBMA)
Mr. Nattapol Chavalitcheevin,

President

Ms. Waraporn Kanchanatip,

Advisor, Research and Planning

Dr. Pramote Suppapanya,

AdvisorMs. Saichon Lisawadi,

Assistant

Vice

President,

ResearchandResearchandDevelopment Department
Ms. Thanaporn Suchatpatamakul, AssistantDivisionManager,Development Department
Mr. Voravuth Srisasi,

Financial Economist, Research and Development
Departmentii

Table of Contents

Foreword······································································································i

Table of Contents···························································································

iii

List of Figures·······························································································v

List of Tables ································································································

vi

EXECUTIVE SUMMARY ··············································································· S-1
I Overview of Thai Bond Market Development···················································

1

1. Overview of the Bond Market in Thailand ··················································

1

2. The Structured Bond Market ····································································

4

2.1 Structured Notes ················································································

4

2.2 Securitization ····················································································

6

3. Government Policy and Legal/Regulatory Structure ·····································

12

4. Market Infrastructure and Major Market Players in Bond Market ·················

15- Primary Market
1. Financial Advisor and Underwriter······················································

16

2. Credit Rating Agency (CRA) ·······························································

16- Secondary Market
3. Bondholders’ Representative·······························································

18

4. Registrar ·························································································

18

5. Thailand Securities Depository Co.,Ltd (TSD) ·······································

20

6. Dealer ·····························································································

21

7. Investor ···························································································

21

8. Custodian ························································································

22

5. Secondary Market and Derivative Market ··················································

22

5.1 Secondary Bond Market ······································································

22

5.2 Derivative Market ··············································································

27

II Major Impediments for Structured Bond Market Development in Thailand ········ 29
1. Supply Factor ························································································

29

1.1 Knowledge & Education ······································································

29

1.2 Legal & Accounting Standards ·····························································

30

1.3 Complexity of Securitization Process ·····················································

30

1.4 Higher Cost of Financing ·····································································

30

1.5 Economy of Scale················································································

30

1.6 Data Quality and Management ····························································

31

2. Demand Factor ······················································································

31

iii

2.1 Knowledge & Education ······································································

31

2.2 Product Size and Diversity···································································

32

2.3 Risks ································································································

32

2.4 Services ····························································································

32

3. Intermediary ··························································································

32

3.1 Technological Know-how······································································

32

3.2 Knowledge & Education ······································································

33

4. Legal / Regulatory Factor ·········································································

34

4.1 Accounting Issue ················································································

34

4.2 True Sale···························································································

34

4.3 Regulation·························································································

35

4.4 Recourse ···························································································

35

4.5 Others ······························································································

36

5. Market Infrastructure ·············································································

36

5.1 Credit Rating Agency ··········································································

36

5.2 Credit Enhancing ···············································································

36

5.3 Information ·······················································································

36

6. Other Impediments ·················································································

37

III Prospects and Policy Recommendation ························································ 38
1. Prospects for Future Structured Bond Market in Thailand····························

38

1.1 Supply ······························································································

38

1.2 Demand ····························································································

40

2. Policy Recommendation to Improve / Develop the Structured Bond Market
in Thailand ····························································································

41

List of Contributors ·······················································································

43

ThaiBMA’s Dealer Members············································································

44

Disclaimer
The information on this paper is for informational purposes only. The Thai Bond
Market Association assumes no liability for any inaccurate, delayed or incomplete
information, nor for any actions taken in reliance thereon. The information in part ofmajor impediment for structured bond market in Thailand which mainly comes fromindividual opinion of market participants is not verified by ThaiBMA. Prospects andPolicy Recommendation in last part of working paper is not necessarily indicative ofstructured bond market direction in the future. Prior to making any investment decision,
it is recommended that you consult directly with a qualified investment advisor.

iv

List of Figures

Figure 1

Composition of Thai Financial Market ·············································

1

Figure 2

Outstanding Value of Domestic Bond as of Dec 2006 ··························

2

Figure 3

Outstanding Value of Corporate Bonds by Business Sector ·················

3

Figure 4

Outstanding Value of Corporate Bond by Type of Bond·······················

4

Figure 5

Legislative Framework of the DAD Program·····································

9

Figure 6

Market Infrastructure for Bond Market ···········································

15

Figure 7

Securities Clearing and Settlement Process ······································

20

Figure 8

Composition of Dealer to Client Transaction in Year 2006 ···················

21

Figure 9

Average Daily Outright Trading Value vs Outstanding Value ··············

24

Figure 10

Turnover Ratio by Bond Type··························································

24

Figure 11

Trading Value by Transaction Type··················································

26

Figure 12

Composition of Financing Transaction in 2006 ··································

27

Figure 13

Contingent Liabilities of Commercial Banks ·····································

28

Figure 14

Issue Size of Structured Bonds, 2004-2006 ·······································

39v

List of Tables

Table 1Top Most Outstanding Value of Corporate Bonds by Issuer ····················

3

Table 2

List of DAD SPV Bond ······································································

9

Table 3

Corporate Registrar Ranking Jan-Dec (Q1-Q4) 2006
(Only Bond Issue in 2006) ·································································

19

Table 4

ThaiBMA Outright Trading Value and Outstanding Value Unit··············

25

Table 5

Top Ten Active Dealer Member Dealer in 2006 ·····································

25

Table 6

Result of the 2004 Triennial Central Bank Survey of Foreign Exchange
and Derivatives Market Activities Daily Average Turnover in OTC

Table 7

Derivative Markets (THB Denominated Instruments)···························

28

Issuer, Underwriter and Outstanding Value of Structured Bonds············

34vi

EXECUTIVE SUMMARYThe Structured Bond Market in Thailand
The Thai bond market made a significant stride of development following the 1997
Asian crisis when Thai Government issued substantial amount of debt instruments tomobilize funds for the nation’s development in many aspects. At the end of 2006,
outstanding value of domestic bonds totaled THB 4,085.26 billion, the majority
portions or about 77% of which were government debt securities comprising loanbonds (LB) and treasury bills (TB) issued by the Ministry of Finance (43%), stateagency bonds* (22%) and state-owned enterprise bonds (12%). The remaining 23%
were long term corporate bonds and commercial papers whereas the Baht
denominated foreign bonds shared marginally by less than 1%.
The long term corporate bonds in Thailand are mainly straight and plain. For
structured bonds which are featured to be more complicated than general debt
instruments, the market is still at an early stage of development. The structured
bonds can be categorized into two groups: structured notes and securitization bonds.
Most of the structured notes in Thailand are issued by commercial banks and aremainly Equity-Linked Notes (ELN). Although the period 1993-1998 witnessed theemergence of securitization market development in Thailand, it did not gain
considerable momentum until late 2003 when Dhanarak Asset Development Company
Limited (DAD), an asset management company owned by the Ministry of Finance(MOF), mobilized funds though the issuance of the largest size of securitization bondsin Thailand for the Government Complex Project.
Currently only a handful of key players are active in the securitization transactions
with quality and variety of securitization projects in Thailand. A number of
constraints were cited as key impediments to the development of the structured bondmarket which can be summarized as follows:・ Knowledge and Technological Know-how
Potential originators and issuers of securitization projects are lack of knowledge
and experience in the concept of raising funds through securitization. On the other
hand, knowledge and experience of institutional and individual investors in terms of
product features, risk and return analysis are also considered insufficient. The major
investors of Thai debt securities are institutional investors such as mutual funds,
pension funds, and insurance companies. Most of them do not have confidence in* Bonds issued by Bank of Thailand (BOT) and the Financial Institutions Development Fund (FIDF).

S-1

investing in such instruments. In particular, they are skeptical about the accuracy
and reliability of the financial projections made in packaging the securitization deals.
Meanwhile, only a few underwriters in Thailand are considered as skillful and havea particular expertise in the securitization of structured bond. Among them are major
local banks such as Siam Commercial Bank, Bangkok Bank and TMB Bank andForeign financial institutions such as The Hong Kong and Shanghai Banking
Corporation and Citicorp. So far, it has been a difficult task for the underwriters toconvince the potential originator to issue securitized bonds.
・ Legal Framework and Accounting Standards
Although the Emergency Decree on Specific Purpose Juristic Person for
Securitization or the so called “Securitization Act” has been promulgated in Thailand
since 1977, providing a legal foundation for special-purpose legal entities of asset
securitization and extending considerable legal benefits to SPVs registered with theSEC, the securitization deals which have taken place up until now are still very
limited. The securitization Act is deemed as complicated compared to securitization
related laws in other countries. In addition, there is no law pertaining directly to theplacement of collateral and also no legislation facilitating the guarantee of the SPV
status in each securitization process.
As far as the accounting practice for the securitization process is concerned, there isno clear-cut accounting standard for the transfer of assets from the originators to the
SPV. To most potential participants in the securitization transactions, there are no
specific conditions for the determination of a real true sale transaction and it cannot
be conclusive that whether sale of assets or transfer of debt is considered as a true
sale or not.
As Thailand does not have a trust law for the time being, the role of thebondholders’ representative in respect of securitized bonds is still not distinctly
defined. Normally, investors would like to have the bondholders’ representatives
acting on their behalf in the event of credit default.
・ Complexity of Securitization Process
The securitization process is regarded as complicated and requires concerted effort
of expertise on different aspects. The process cited as most difficult and complicated isthe future cash flow projection, especially for projects involving a relatively long
period e.g. 30 years. Accordingly, in packaging a securitization deal, experienced
professionals are required at every stage particularly the appointment of financial
advisors, legal and tax counsels, the servicers, the bondholders’ representatives. This
inevitably results in relatively higher cost of financing compared with the issuance ofstraight and plain vanilla bonds.

S-2

・ Economy of Scale
In many countries, the most common underlying assets of asset-backed securitizedbonds are auto loan and credit card receivables. However, the asset size of mostfinancial institutions providing auto financing and credit card services in Thailand is
not large enough to create economies of scale in employing a large pool of experts tofacilitate the securitization transaction. They consequently turn to other methods offinancing such as the issuance of plain debentures or borrowing from banks.
The nature of small auto loans and credit card receivables market also leads to thefact that the value of structured bonds backed by auto loans and credit card receivables
offered for sales is relatively small, resulting in limited liquidity as major investors suchas insurance companies, pension funds and mutual fund companies, which hold large
investment portfolio, usually buy these securities and hold them until maturity. Limited
liquidity of the issues contributes to the slow development of the structured bondmarket in Thailand and subsequently creates the cyclical cause-and-effect. As themarket is small and the number of issuers is limited, it is not attractive for creditworthy
companies abroad to undertake credit enhancement/guarantee business in Thailand.
The inadequate market infrastructure further retards the growth of the market.
・ Data Quality and Data Management
One of the critical factors for the success of a securitization project is the sufficiencyof data and information which is essential for the analysis of current situation, theprojection of future cash flows, as well as the monitoring of asset quality. Without aneffective database management system, a major constraint for most participants inthe securitization market is that relevant data and information is not collected in astandardized pattern and consequently cannot be utilized effectively.
Information disclosure is another concern of the investors. Although information
disclosure at the initial process is adequate, the performance report of the project islimited to a group of investors, and the general investors have to acquire suchinformation from the servicers on a case by case basis.
Despite the constraints discussed above, there are certain evidences supporting afavorable prospect for the future development of the structured bond market in
Thailand:1. Commercial banks which are the major source of assets for securitization arelikely to face with a number of challenges in the near future including therequirement to comply with IAS 39, loan default, and intensifying competition
with mutual funds for deposits. This may in turn force them to sell their assets
for securitization and consequently increase the market supply.

S-3

2. Securitization on auto loan and credit card receivables will continue to grow aslong as there are still significant spread between the lending rate and the cost offunding through securitization.
3. Amendment to the Securitization Act and the Enforcement of the Trust Law are
currently under process. Once the legislation is put into effect, it would certainly
help create a more comprehensive and clear-cut framework for the securitization
process both on the legal and accounting aspects.
4. The liberalization of the securities business scheduled for 2012 may facilitate theexpansion of structured bonds in Thailand as more participants are expected toenter into the market.
5. A more stable political situation and higher economic growth is expected soon,
encouraging investment of infrastructure projects which increase the need for
raising funds through bond issuance.
6. The regulators are considering promoting monoline insurance or guarantor of
securitization bonds to boost the investors’ confidence. This should increase thegrowth of the asset backed securitization market.
Policy Recommendations for the Development of the Structured Bond Market in Thailand
1. Related institutions both in the public and private sectors including universities
should collaborate in providing knowledge and technical know-how on
securitization. It is recommended that a central unit responsible for theeducation of this type of securities is established in order to expand the potential
investor base.
2. The Bank of Thailand must play an active role in motivating and facilitating risk
management of commercial banks through securitization.
3. The government should continue to provide appropriate infrastructure forissuance of securitization bond for example the enforcement of trust law for nontaxable SPVs or entities, expansion of investor base, credit enhancement , etc.
4. Establishment of an effective data management system is essential for
facilitating the development of the securitization market. In particular, it isstrongly recommended that the credit information of all borrowers in Thailand,
which is the invaluable assets of the Credit Bureau, should be utilized more
efficiently and effectively in order to benefit all participants in the securitization
market in the long run.

S-4

I

Overview of Thai Bond Market Development

1. Overview of the Bond Market in Thailand
Although the first issuance of debt instrument in Thailand took place a century ago,
it was not until the past decade that the Thai bond market made a significant stride of
development. In the wake of the Asian economic crisis in 1997, the Thai Government
which envisaged huge budget deficits and financial liabilities became the major issuerof debt instruments to mobilize funds to facilitate the nation’s development in many
aspects. This in turn provided the impetus for the Thai bond market to take off.
Figure 1:

Composition of Thai Financial Market

Source: ThaiBMA

Domestic Outstanding ValueAt the end of 2006, outstanding domestic bonds totaled THB 4,085.26 billion;
increased by 600 folds from the value of THB 546.80 billion in 1997 (see Figure 1). The
Thai bond market can be categorized into three major segments, i.e., government debt
securities, corporate bonds, and foreign bonds.
The government debt securities comprise loan bonds (LB), treasury bills (T-Bill),
state-owned enterprise bonds (SOE), and state agency bonds (SA)1. There are two
1

The state agency bonds (SA) are bonds issued by the Bank of Thailand and the Financial
Institutions Development Fund (FIDF) which is established as a separated juristic entity from the
Bank of Thailand to rehabilitate financial institutions to maintain stability in the financial system.
Currently, the FIDF has stopped issuing bonds and all the SA bonds are those issued by the Bankof Thailand.

1major types of bonds in the corporate sector: long-term corporate bonds andcommercial papers. Foreign bonds are instruments issued by international foreign
institutions (IFIs), foreign governments (FGs), multinational corporations (MNCs) or
any foreign issuers which were endorsed by the Ministry of Finance to raise funds
domestically through the issuance of bonds.
Of the total outstanding bond value of THB 4,085.26 billion at the end of 2006, themajority portions, or about 77%, are government debt securities. This comprises loanbonds and treasury bills issued by the Ministry of Finance (THB 1,737.07 billion or43%), state Agency bonds (THB 896.70 billion or 22%) and state-owned enterprisebonds (THB 492.89 billion or 12%) (see Figure 2). The structure demonstrates heavy
reliance on supply from the public sector, in particular the Ministry of Finance.
Currently loan bonds and treasury bills are auctioned weekly, with the auction value ofapproximately THB 5,000-8,000 billion per week for loan bonds, and approximately
THB 14,000-18,000 billion per week for treasury bills.
Figure 2:

Outstanding Value of Domestic Bond as of Dec 2006
Corporate
Bond
23.07%

Fore ign Bond
0.39%
Gove rnm e nt
Bond
36.94%SA Bond21.95%SOE Bond
12.07%

T-Bills
5.58%

Source: ThaiBMA

The Baht denominated foreign bond2 made its debut in Thailand in 2005 when the
Asian Development Bank (ADB) issued THB 4 billion worth of domestic bonds on 24
May 2005. This was followed by the THB 3 billion worth of bonds issued by Japan
Bank for International Cooperation (JBIC) on 7 September of the same year. In 2006,
there were 3 issues of foreign bonds, 2 of which were issued by ADB worth THB 6.5
billion and another issued by CitiGroup, Inc., worth THB 2.6 billion. The total
outstanding value of foreign bonds stood at THB 16.10 billion at the end of 2006.

2

International Financial Institutions, the Foreign Governments and Financial Institutions ofForeign Governments, and foreign entities are permitted by the Ministry of Finance to issue
Baht-denominated bonds or debentures in Thailand.

2

In the private sector, the outstanding value of long term corporate bonds andcommercial papers combined to a total amount of THB 942.51 billion at the end of 2006.
Among the top five industrial sectors, corporate bonds of the energy sector ranked in
the first place with 23% share, followed by finance and securities companies (12%),
communications sector and banking sector (10% each), construction material sector(2%) and chemicals sector (1%) (see Figure 3). The majority of corporate bonds (about93%) are assigned a credit rating of “A” and above.
Figure 3:

Outstanding Value of Corporate Bonds by Business Sector
Bank
9.50%

COMMU
9.51%

HOLDING
0.02%

CHEM
1.42%
BUILD
1.71%
Energy22.89%

Others
42.71%

Finance andSecurities
12.24%

Source: ThaiBMA

Table 1: Top Most Outstanding Value of Corporate Bonds by Issuer
Business Sector
1. Energy

2. Finance and Securities
Companies

3. Communications
4. Bank

5. Construction Material

6. Chemicals

Issuer
1. PTT Public Company Limited
2. Energy Fund Administration Institute(Pubic Organization)
3. Banpu Plc.
4. Glow Energy Plc.
5. Ratchaburi Electricity Generating Co., Ltd.
1. Toyota Leasing (Thailand) Co., Ltd.
2. Siam Commercial Leasing plc.,
3. Krungthai Card Plc.
4.Thanachart Capital Plc.
5.Kiatnakin Finance Plc.
1. Advanced Info Service Plc.
2. Total Access Communication Plc.
3. True Corporation Plc.
1. Kasikornbank Plc.
2. Bank of Ayudhya Plc.
3. Krung Thai Bank Plc.
4. TMB Bank Plc.
5. Small and Medium Enterprise Development
Bank
1. Siam Cement Plc.,
2. Holcim Capital (Thailand) Co., Ltd.
3. Sahaviriya Steel Industrial Plc.
4. Canadoil Asia Co., Ltd.
5. Vanachai Group Plc.
1. Aromatics (Thailand) Plc.
2. PTT Chemical Public Company Limited

Source: ThaiBMA

3

Almost all government debt securities in Thailand are straight bonds whereas longterm corporate bonds are more diversified in type of issuance. Apart from straightbonds which accounted for 82% of the total outstanding value of long term corporate
bonds registered with the Thai Bond Market Association (ThaiBMA), some companies
also issued amortizing bonds (13%), structured bonds (5%), and convertible bonds (lessthan 1%) (see Figure 4).
Figure 4:

Outstanding Value of Corporate Bond by Type of Bond
Conve rtible
2.18 Bln

Structure d
30.90 Bln

Am ortizing
77.71 Bln

Straight
498.12 Bln

Source: ThaiBMA

2. The Structured Bond Market
Although the characteristics of long term corporate bonds in Thailand are morediversified relative to government debt securities, they are still plain and not socomplicated. As for structured bonds which are featured to be more complex than
general debt instruments, they can be categorized mainly into two groups: structured
notes and securitization bonds.
2.1 Structured Notes
The development of structured notes in Thailand materialized when the Securities
and Exchange Commission (the SEC) issued a notification in May 2003, namely, the
SEC Notification Gor Jor 4/2546 Regarding Application and Permission to Offer Newly
Issued Structured Notes, permitting corporate entities and commercial banks
incorporated in Thailand, including branches of foreign banks, to mobilize fundthrough the issuance of structured notes.
The term structured notes stipulated in this notification are debt instruments withthe following characteristics of debt repayment:4

1. The amount of return is linked with a pre-determined underlying variable otherthan interest rate.
2. Total or partial amount of principal to be redeemed at maturity is linked with apre-determined underlying variable.
3. Total or partial amount of return or repayment of principal at maturity can be madein the form of securities and other types of assets, except for newly issued shares of
the issuer.
The above mentioned notification has been repealed by the SEC Notification Gor Yor
31/2549 dated 15 November 2006 which covered additional details about theregulations and conditions concerning the permission of the sale of structured notes.
There are currently 13 issues of structured notes traded on the secondary market in
Thailand. Out of this, 12 issues are issued by commercial banks whereas another one
issued by a securities house. Most of the structured notes in Thailand are
Equity-Linked Notes (ELN) of which return is determined by the performance of abasket of equity securities e.g. SET Index, Nikkei 225 Index, etc. Major issues in thiscategory are:
1. Two tranches of bills of exchanges issued by ABN Amro Bank NV, due 2008
(ABNA08OA) and 2009 (ABNA096A (Not rated)) with Nikkei 225 index as thereference index.
2. “K-Smart” promissory note issued by Kasikornbank Public Co, Ltd. (KBNK088A(AA(tha))) with SET 50 index as the reference index.
3. Six tranches of promissory notes issued by Siam Commercial Bank Public Co., Ltd.
due 2008 (SCB089A, SCB08OA, SCB08OB, SCB08OC (Not rated)), due 2009
(SCB091B (Not rated)) with SET 50 index as the reference index, and due 2010
(SCB101A (Not rated)) with Community Index as the reference index.
4. ROCA-3 derivative debenture issued by SCB Securities Public Co., Ltd., with atenor of no more than 9 months (SCBS1A37 (Not rated)) with certain three
securities as the reference securities.
There are also structured notes of which coupon rate is linked with other underlying
variables, for example:
5. Bills of exchange issued by Citibank NA due 2007 (CITI077A (Not rated)) with THB
6-month fixed deposit rate capped at 5.25% and floored at 3.25% as the referencerate.
6. Bills of exchange issued by ABN Amro Bank NV due 2007 (ABNA075D (Not rated))
with THB Fix 6 month capped at 4.85% and floored at 3.7% as the reference rate.
57. Subordinated debenture characterized as the hybrid tier-1 capital issued byKrungthai Bank Public Co., Ltd. (KTB06PA (A+(tha))). The instrument shall notmake interest payment or accrued interest when the issuer cannot generate profit
in that specific period.
2.2 Securitization
The period during 1993-1998 witnessed the emergence of securitization market
development in Thailand. Initially, the securitization transactions involved therepackaging of auto receivables and export receivables for resale as tradable securities
in the overseas market through Special Purpose Vehicles (SPVs). Notable transactions
during this period include the Bank of Asia Receivables, TISCO Leasing and Tru-Way
Company (“Thai Cars Deal”), SITCA Securitization Project, Nithipat Leasing, andWong Paitoon.
In June 1999, LSPV Company Limited offered on a private placement basis the
securitization debentures which was secured by a pledge of spirits so acquired in formof a pledge of warehouse warrants and was guaranteed by Saeng Som Company
Limited, a major producer of liquor in Thailand. The program comprised 3 series ofamortizing secured debentures, totaled THB 11,070 million. Another notable issue was
the securitization of a pledge on unit trusts and mortgage loans of Lehman Brothers
Group, with G.T Stars acting as intermediary. In the public sector, the National
Housing Authority (NHA) initiated the first two public sector securitization programsin 1999. The first program worth THB 345.95 million is backed by the receivables of
the Second Mortgage Corporation (SMC - the originator), and SMC SPV Company
Limited acted as the SPV offering the debentures through private placement. Anotherprogram had NHA being the originator, while NHA SPV Co., Ltd. and Osprey Series I
Co., Ltd acted as intermediaries, issuing short-term debentures worth a total of THB
607.9 million offered for sale to the general public. Currently, Osprey Series I Co., Ltd.
has issued short-term debentures from time to time to accommodate the redemption of
the short-term debentures issued under the securitization program.
As of January 2007, there are 21 issues of securitization bonds traded in thesecondary market and registered with the Thai Bond Market Association, with issue
size ranging from THB 77 to 6,000 million, or an average of THB 1,900 million per
issue. Such securitization bonds can be categorized into 4 groups according tocharacteristics of the assets which were securitized as follows:61. Asset Back Securities (7 issues by 6 companies)
Originator

Name of Issuer

1. Scandinavian
Leasing Plc.
2. Siam Panich
Leasing Plc.
3. Siam Industrial
Credit Plc.
4. Siam Industrial
Credit Plc.
5. National Housing
Authority
6. National Housing
Authority

1. Auto Receivable SPV
Co., Ltd.
2. Siam Panich SPV 1 Co., Ltd

No. ofIssue
1
2

Name of Issue

Rating

AUTO071A

A+(tha)AAA(tha)3. SICCO Special Purpose
Vehicle 1 Co., Ltd.
4. SICCO Special Purpose
Vehicle 2 Co., Ltd
5. Osprey Series I Co., Ltd1

SPLV103A ;SPLV119A
SSPV09NA1

SSPV112A

AAA

1

OSPA1A37

F1(tha)6. Osprey Series II Co., Ltd

1

OSPB1A37

F1(tha)AAA

2. Credit Card/Personal Loan Receivable-backed Securities (7 issues by 3 companies)
Originator

Name of Issuer

1. AEON Thana
Sinsap (Thailand)Plc
2. AEON Thana
Sinsap (Thailand)Plc

1. Eternal Credit Card Special
Purpose Vehicle Co., Ltd

3. AEON Thana
Sinsap (Thailand)Plc

2. Eternal 3 Special Purpose
Vehicle Co., Ltd

3. Eternal Special Purpose
Vehicle Co., Ltd.

No. of
Issue
2
4

1

Name of Issue

Rating

ECC082A ;ECC102A

AAA(tha)Class A1 & A2 :ESPT092A;
ESPT112A
Class B :ESPT113A
Class C :ESPT113B
ESPV102A

AAA(tha)Name of Issue

Rating

BCP141AAA

Name of Issue

Rating

DAD12NA;DAD15NA;DAD20NA;DAD20NB;DAD25NA;DAD25NBAAA

AA(tha)A(tha)
AAA(tha)3. Deposit Receipts : 1 issue
Originator
1.Bangchak
Petroleum
Plc.

No. ofIssue
1

Name of Issuer
1. Siam DR Co., Ltd

4. Future Cash Flow : 6 issues
Originator
1. Dhanarak Asset
Development
Co., Ltd

No. ofIssue
6

Name of Issuer
1. DAD SPV Co., Ltd

7

DAD SPV Company Limited
The securitization market in Thailand gained considerable momentum in late 2003
when the project of Bangkok Metropolitan Government Office Center (or theGovernment Complex), responsible by Dhanarak Asset Development Company
Limited (DAD), an asset development company owned by the Ministry of Finance(MOF), mobilized fund through the issuance of securitized bonds. Under the program,
DAD SPV Co., Ltd. (DAD SPV) plans to issue debt securities worth up to THB 24
billion within three years for sale to the general public. The issued debt securities arebacked by future rental fee obligations of the Treasury Department (TD), Ministry of
Finance (MOF). Such initiation is the largest size of securitized debt securities everlaunched for public offering in Thailand.
Rationale for the DAD Program:
1. The government wants to centralize various governmental offices which in the past
rented building space from the private sector. These offices incurred a huge sum oflease payment each year.
2. The government wants to raise funds directly from the local investors, which havean abundance of funds, without disturbing the government budget.
3. The government wants to spearhead the development of the securitization market
in Thailand by building up the public familiarization and understanding of theissuance of securitized debt instruments. Although some government agency suchas the National Housing Authority used to launch such securitization program in
the past, they had involved short-term securities and had not much contributed tothe development process of the securitization market in Thailand.
DAD SPV is scheduled to issue debt securities worth up to THB 24 billion within
three years (from 2005 to 2007). The debentures are structured to receive lease andservice payments from TD under a 30-year Building Space Lease Agreement, a 30-year
Service Agreement, and a 5-year Furniture Procurement Agreement, collectively
referred as the Asset Agreements, which TD has engaged with DAD. Proceeds from thesecuritized debentures are used to finance the construction of the Government
Complex.
As of January 2007, DAD SPV has issued 6 tranches of securitized debentures under
the program at a total value of THB 18,500 million, comprising 4 debentures issued in2005 worth a total of THB 10,300 million, 2 tranches in 2006 worth a total of THB
8,200 million (see Table 2) and the remaining THB 5,500 million worth of debentures is
expected to be launched in 2007. Following the debenture offering, the future liquidity8

of DAD SPV will be derived from net proceeds from the offering of the THB 24,000
million of securitized debentures and the net proceeds from the main operations. As for
major future flow of expenses, they will include interest and principal repayment of thedebentures, and the cost of purchase of rental payment obligations, and expenditures.
Table 2:
Issue Year
2005

2006

List of DAD SPV Bond

Issue

Tenor

Coupon (%)

Rating

1.DAD12NA

7 Yrs

6.7

AAA

2.DAD15NA

10 Yrs

7.35

AAA

3.DAD20NA

15 Yrs

7.5

AAA

4.DAD25NA

20 Yrs

7.99

AAA

1.DAD20NB

14 Yrs

6.05

AAA

2.DAD25NB

19 Yrs

6.5

AAA

Source: ThaiBMA

Figure 5:

Legislative Framework of the DAD Program

MOF

TD

1

2

DAD
-Transaction Administrator

3-Bondholder Representative
4-Registrar and Paying AgentDAD SPV-Underwriter-Rating Agency

5-Auditor

Investor

Source: DAD SPV

1. DAD has entered into a 3-year land lease agreement with the TD (from July 2005 toJune 2008) for construction of the project and another 30 years (from July 2008 toJune 2038) for building lease. DAD will oversee the construction of the project andmanage the properties after completion of the project.
2. DAD has leased the properties back to TD for the period of 30 years (from July 2008
to June 2038) for sub-leasing to government departments and related agencies.
During this period, DAD will provide service and maintenance functions and willprocure the furniture for the lessees.
3. DAD will transfer the rights to receive lease and service payments obliged to be9

paid by TD to DAD SPV under the Asset Agreements in order to use part of therights to fund the project construction and administration.
4. DAD SPV appointed related parties in the securitization program, i.e., Transaction
Administrator,

Bondholders’ Representative,

Registrarand

PayingAgent,

Underwriters, Rating Agency and Auditor.
5. DAD SPV issued securitized debentures under the program up to THB 24,000
billion for sale to institutional investors and the general public according to rules
and regulations specified in the SEC Notification Gor Jor 4/2548.
Credit Enhancement of DAD SPV Securitized Debentures
Since the securitized debentures of DAD SPV is backed by future cash flows ofreceivables which DAD SPV has purchased the rights to receive from DAD under the
Asset Agreements and the Government Complex is currently under construction, inorder to enhance the creditworthiness of the project, and to strengthen the investors’
confidence regarding interest payment and principal repayment, DAD SPV has
engaged in the following conditions for credit enhancement:
1. TD is unconditionally and irrevocably obliged to pay lease and service payments inaccordance with the Asset Agreements between DAD and TD throughout the life of
the transaction.
2. The transaction administrator on behalf of DAD SPV is committed to allocating partof the net proceeds from the debenture issuance and the lease and service payments
received from TD into three reserve accounts as follows:
2.1 General Reserve
During the construction period, an amount equating to withholding tax payable in2008, interest and expenses payable for the period of the bond issuance date until
November 2008 will be deducted from the proceeds of the bond issuance and held in
the general reserve. From July 2008 onwards, this reserve at the equivalent of 12months of withholding tax, interest and expenses payable will be funded from annual
lease payment received.
2.2 Liquidity Reserve
This reserve will be funded from annual lease payments received and maintained at
the equivalent of 92 days’ interest and expenses. This reserve will be available to cover
any shortfall or delay in such payment, but following a drawdown will be replenishedon the following collection date.

10

2.3 Principal Accumulation Reserve
This reserve will be built from the first lease payments received in July 2008 to meetprincipal repayments on the bonds, according to a fixed schedule after interest,
expenses and taxes have been met. This reserve will be used to repay the principal of
the bonds at maturity. DAD SPV has entered into a swap agreement (the Guaranteed
Investment Contract) with The Hong Kong and Shanghai Banking Corporation Ltd(HSBC), the swap counterparty, equivalent to 2005 and 2006 bond issues amount,which guarantees the return on cash held in the principal reserve account to reduce
DAD SPV’s negative carry risk. under the swap agreement, DAD SPV will transfer therequired amount to HSBC in November each year for 2005 bond issues and in March
the following year for 2006 issues, and HSBC will then return the fixed amount to
DAD SPV at least 3 days prior to the due date of each bond series. Any substitution of
the swap counterparty is allowed only if the rating of the counterparty is no worse than‘AAA(tha)’ and/or AAA.
3. Any future issuance of debentures by the issuer under this securitization program
will not impact the ratings of the outstanding debentures.
To further enhance the creditworthiness of the securitized debentures of DAD SPV
and to add investors’ confidence, DAD SPV has acquired credit ratings for thesedebentures from the two authorized credit rating agencies in Thailand, namely, TRIS
Rating Co., Ltd. and Fitch Ratings (Thailand) Ltd. The 6 series of debentures issued by
DAD SPV have been assigned AAA and AAA (tha) ratings from TRIS Rating and Fitch
Ratings, respectively.
Related Parties in the DAD Project
1.
2.
3.

Responsibilities
Originator
IssuerTransaction Administration

4.

Bondholders’ Representative

5.
6.
7.

Registrar
Paying Agent
Underwriter

8. Rating Agency
9. Swap Counterparty
10. Legal and Tax Counsel
11. Accounting Counsel
12. Financial Advisor
13. Financial Advisor of
Originator (Program Advisor)
14. Auditor

Operator- DAD- DAD SPV
- Conduit Management Services Ltd.
- Bangkok Bank Public Co., Ltd- Thai Military Bank Public Co., Ltd- Thai Military Bank Public Co., Ltd- Bangkok Bank Public Co., Ltd.
- Thai Military Bank Public Co., Ltd- The Hong Kong and Shanghai Banking Corporation Ltd.
- Fitch Ratings (Thailand) Ltd.
- TRIS Rating Co., Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited- White & Case (Thailand) Limited- Earnst & Young Co., Ltd.
- Bangkok Bank Public Co., Ltd- Thai Military Bank Public Co.Ltd- The Hong Kong and Shanghai Banking Corporation Limited- Trinity Advisory 2001 Co., Ltd- Earnst & Young Co., Ltd

Source: DAD SPV

11

3. Government Policy and Legal/Regulatory Structure
Laws, notifications and/or regulations governing debt instrument issuance inThailand can be categorized into major groups according to type of issuers as follows:
1. Debt instruments issued by the Ministry of Finance, which are under the following
laws and regulations:- The Public Debts Management Act B.E. 2548
- The Royal Decree Empowering the Ministry of Finance to Borrow and Manage theLoans to Assist the Financial Institution development Fund (FIDF) B.E. 2543
2. Debt instruments issued by state-owned enterprises, which are under the following
laws and regulations:- Act Concerning the Establishment of State-Owned Enterprises under which eachstate-owned enterprise is governed separately with different details of specificrules and regulations.
- The Public Debt Management Act, B.E. 2548, which, combined with the Act
Concerning the Establishment of State-owned Enterprise, regulate the issuance ofState-Owned Enterprise Bonds guaranteed by the Ministry of Finance.
3. Debt instruments issued by the Bank of Thailand, which are under the following
laws and regulations:- The Bank of Thailand Act, B.E. 2485
- The Royal Decree Concerning the Operations of the Bank of Thailand, B.E. 2485
- Regulations of the Bank of Thailand Concerning the issuance of the Bank ofThailand Bond, B.E. 2546
- The Bank of Thailand Notification Concerning the Distribution, Authorized person
to Auction, Underwriting and Settlement of The Bank of Thailand Bond, B.E. 2546
4. Debt instruments issued by Thai companies incorporated under Thai laws or
foreign bank branches authorized to undertake full branch operations in Thailand
are regulated by- The Securities and Exchange Act, B.E. 2535
- SEC Notification Gor Yor 31/2549 Re: Application and Permission to Offer Newly
Issued Debentures- SEC Notification Gor Jor 2/2549 Re: Offering of Foreign Debentures toCommercial Banks in Thailand- SEC Notification Gor Jor 4/2549 Re: Offering of Foreign Bonds or Foreign
Debentures in Thailand- BOT

Notification

Re:

Permission

forCommercial

Banks

to

Undertake

Securitization BusinessIn addition, business entities established under the Thai laws, or foreign bankbranches authorized to undertake full branch operations in Thailand, are able to issue
securitized debentures in three alternatives as follows:121) Issue debentures under the Emergency Decree on Specific Purpose Juristic
Person for Securitization (The Securitization Act) and the SEC Act.
2) Issue debentures under the SEC Act.
3) Comply with the rules and regulations concerning the establishment of mutual
funds purchasing distressed assets from financial institutions.
Issuers of securitized debentures under the Securitization Act are entitled to enjoy
tax privileges provided that all remaining benefits of the securitization program (net ofdebt repayment and related expenditures of the program) are transferred to theoriginator to ensure that real purpose of the securitization is to mobilize funds for theoriginator. A special purpose juristic person or an SPV is set up for the purpose of
securitization and will act as a mechanism to issue securities in order to segregate out
the assets of the originator for asset management only. An SPV may invest or seek
benefits from the transferred assets in accordance with the approval of the SEC but
this shall not impact the debt repayment of the program.
Regardingsecuritization

process

under

the

regulations

concerningtheestablishment of mutual funds purchasing distressed assets from financial institutions,or the so called type 2, type 3 and type 4 mutual funds, these funds are entitled to thesame tax benefits as general mutual funds, i.e., corporate tax and property transfer tax
exemptions. Type 2, 3, 4 mutual funds were set up during the period when Thailand
encountered economic crisis in 1997 in order to raise funds through the sale of unit
trusts of the funds to purchase distressed assets of financial institutions. Currently,
the SEC Office has stopped receiving applications for establishment of these funds,
with the last fund scheduled to terminate on August 31, 2015. Apart from this, theSEC currently has no policy to allow SPV in the form of mutual funds, although
Section 9 of the Securitization Act stipulates that a special purpose juristic person may
be established in the form of a private limited company, a public limited company, amutual fund or any other type of juristic person as may prescribed by the SEC.
SEC Notification Concerning Fund Management
1. Establishment and Management of Mutual Funds- SEC Notification Gor Nor 8/2547 Re : Guidelines, Conditions and Methods for
Establishment and Management of Mutual Funds- SEC Notification Sor Kor 23/2547 Re : Establishment of Mutual Funds andExecution of Agreements for Management of Private Funds
2. Determination of Investment Ratio- SEC Notification Sor Nor 28/2549 Re: Investment and Acquisition of Assets by
Funds
13

Issuers of securitized debentures can seek the SEC approval to issue securitizeddebentures either in accordance with the Securitization Act or not. However, it has
been evidenced that currently all securitization programs were processed under the
Securitization Act. Securitized debentures may be offered to investors domestically ona private placement (PP) basis or offered to offshore investors. Moreover, the new SEC
notification (Gor Yor 31/2549) also allows the public offering of securitized debentures
within the country.
In case of a public offering, the regulations required that a bondholder’srepresentative must be appointed. The bondholders’ representative has the duty tomonitor the activities carried out by the SPV and counterparty in compliance with theagreements and endorse the change of a servicer. If the servicer is a different entity
other than the originator, it must be a financial institution or a juristic person
approved by the SEC. The sevicer must have a separate account for debt settlement
payments and the proceeds cannot be used for other purpose. The servicer must
transfer the debt settlement payments together with reporting documents to the SPV
within 15 business days and at the same time submit the reports to the bondholders’representatives.
Privileges of Debenture Issuance Under the Securitization Act
Issuance of securitized debentures in compliance with the terms and conditions
stipulated in the Securitization Act is entitled to various privileges in the process ofasset transfer between the originator and the servicer as follows:
1. If the originator acts as the servicer (remains the agent who collects and receives
payments of debts after the securitization transaction has occurred.), there is noneed to notify each individual obligor (debtor) of the transfer of the debt pursuant to
Section 306 of the Civil and Commercial Code.
2. In the event that the originator goes bankrupt after the asset transfer, the assets of
the SPV are safe. (Bankruptcy remoteness)
3. The originators and SPV’s in a securitization transaction are exempted from thetransfer fee payment of assets and collateral.
4. If the originator which is a financial institution had been legally entitled to chargeinterest beyond 15% per annum from the debtor, normally the maximum allowed in
Thailand, then the SPV is also entitled to charge the specified amount of interest
once the securitization process has been completed.
5. In the event that the SPV is adjudged bankrupt, the investors of the securitizeddebentures which are not subordinated to other unsecured creditors have status assecured creditors under the bankruptcy law. Essentially, the holders of such
instruments are entitled to payments before any other type of creditor of the SPV in
14

the event of a bankruptcy.
In addition, issuance of securitized debentures under the Securitization Act is also
entitled to tax privileges e.g., exemption of value added tax, special business tax andstamp duties. An SPV in the form of private limited company is entitled to consider the
reserves for doubtful debts as expenditures in corporate tax calculation. In the case ofborrowers of the housing loans which have been transferred to an SPV, the interest
payments paid for the loans are personal income tax deductible.
During 2006, four companies were granted approval by the SEC to offer 9 series of
securitized debentures through SPVs under the Securitization Act, with a total
issuance amount of THB 18,480 million3.
1. AEON Thana Sinsap (Thailand) Public Company Limited issued 4 series of credit
card receivables securitized debentures worth THB 2,280 million.
2. Siam Commercial Leasing Public Company Limited issued 4 series of debentures
backed by auto loan receivables worth THB 5,000 million.
3. SICCO Finance Public Company Limited issued debentures backed by auto loan
receivables worth THB 3,000 million.
4. DAD issued 2 series of debentures backed by future flows of lease payment from theGovernment Office Center Project, worth THB 8,200 million.
4. Market Infrastructure and Major Market Players in Bond Market
Figure 6:

Market Infrastructure for Bond Market

Primary Market

Secondary Market

SEC
CRA

Investor
Registrar

IssuerDealerUnderwriter

TSD
Investor

Financial
Advisor

Source: ThaiBMA

3

See more information on ThaiBMA website

15

This section will discuss briefly the major players involved in the process of bondissuance in the primary and secondary markets.
Primary Market
1. Financial Advisor and Underwriter
Most issuers of debentures will appoint financial advisers and underwriters tofacilitate the issuance process. The financial advisor and underwriter will assist theissuer in applying for issuance approval and filing with related regulators necessary
information and documents. They will also prepare required data and information inseeking credit rating and marketing campaigns which will contribute to the success of
the issue as planned. Normally, the financial advisor and the underwriter is the same
company.
Currently there are 68 companies granted licenses to undertake business of debt
instruments underwriters; they comprise 19 commercial banks, 39 securities houses.
However, only 15 are active players in this sector, most of which are commercial banks.
In 2006, the top five debt instruments underwriters are all commercial banks, withStandard Chartered Bank (Thai) Public Company Limited ranked at the first place,followed by Kasikornbank Public Company Limited..
Underwriters Ranking Jan to Dec (Q1-Q4) 2006
Ranking

No. ofIssuesU/W

Amount(THB mln.)% Shares

1Standard Chartered Bank (Thai) Plc.

16

38,401.00

25.64

2

Kasikornbank Plc.

20

28,223.41

18.85

3

Siam Commercial Bank Plc.

17

27,663.04

18.47

4

Citigroup Securities (Thai) Ltd

13

18,180.00

12.14

5

Bangkok Bank Plc.

14

17,618.78

11.77

Source: ThaiBMA

2. Credit Rating Agency (CRA)
According to the SEC Notification Gor Jor 30/2544, newly issued debentures mustseek the credit rating from an authorized credit rating agency each time of issuance ifsuch debentures are offered to the general public. This requirement is not applied todebentures issued for private placement. Presently there are 2 credit rating agencies
authorized by the SEC, namely, TRIS Rating Co., Ltd. and Fitch Ratings (Thailand)

16

Ltd.
Credit ratings for debt instruments are divided into short term and long term
ratings. TRIS and Fitch Ratings assign different rating symbols to indicate thecreditworthiness of the debt issue as follows:
Long-term Corporate Bond
TRIS

Fitch

Rating Definition

AAA(tha)AAA

Highest Rating

Investment Grade Bonds

AA(tha)AA

Very low degree of credit riskA(tha)A

Low credit risk

BBB(tha)BBB

Moderate credit riskBB(tha)BB

High credit riskB(tha)

B

Very high credit risk

CCC, CC, C(tha)C

Highest credit risk

DDD, DD, D(tha)D

Default

Speculative Grade Bonds

Source: TRIS Rating and Fitch Ratings

Short-term Corporate Bond
TRIS :
SymbolDefinition

T1

Issuer has strong market position, wide margin of financial protection, appropriate liquidity
and other measures of superior investor protection. Issuer designated with a "+" has ahigher degree of these protections.

T2

Issuer has secure market position, sound financial fundamentals and satisfactory ability to
repay short-term obligations.

T3

Issuer has acceptable capacity for meeting its short-term obligations.

T4

Issuer has weak capacity for meeting its short-term obligations.

Source: TRIS Rating

FITCH RATINGS :SymbolDefinition

F1 (tha)Strongest capacity for timely payment of financial commitments

F2 (tha)Satisfactory capacity for timely payment of financial commitments

F3 (tha)Adequate capacity for timely payment of financial commitments

B (tha)Uncertain capacity for timely payment of financial commitments

C (tha)Highly uncertain capacity for timely payment of financial commitments

D (tha)Actual or imminent payment default

Source: Fitch Ratings

17Currently there are 177 series of debentures registered with the ThaiBMA having
obtained credit ratings from TRIS, 152 of which are assigned “A” rating and above
whereas 25 are assigned rating below investment grade. Meanwhile, there are 110
issues rated by Fitch Ratings, 88 of which are assigned “A” rating and above and 22
issues are assigned rating below investment grade. It is also noted that there are 18
issues which have been rated by both TRIS and Fitch.
Secondary Market
3. Bondholders’ Representative
The SEC has stipulated that a bondholders’ representative is required for theissuance of some forms of debentures, i.e., the debentures offered to the general public
and the secured debentures offered on a private placement basis. According to the SEC
regulations, the bondholders’ representative must be a financial institution with soundfinancial status and has no conflict of interest in performing the role of bondholders’representative. The major responsibilities of a bondholders’ representative include
monitoring the issuer to comply with the terms and conditions under the bonds,
monitoring the interest and principal payment of the issuer, and holding the benefit of
the security documents or any properties for the bondholders. Currently there are 13
bondholders’ representatives approved by the SEC as follows:
1. Bangkok Bank Public Company Limited
2. Bangkok First Investment & Trust Public Company Limited
3. Bank of Ayudhya Public Company Limited
4. Kasikornbank Public Company Limited
5. JP Morgan Chase Bank
6. Citibank, N.A.
7. Deutsche Bank
8. TMB Bank Public Company Limited
9. Bankthai Public Company Limited
10. Siam Commercial Bank Public Company Limited
11. Thanachart Bank Public Company Limited
12. Siam City Bank Public Company Limited
13. The Hong Kong and Shanghai Banking Corporation Limited
4. Registrar
A Registrar provides services to issuers and holders of securities in such areas as
securities transfer, pledging, confiscation, change of particulars in the securities
register, securities holder’s book closing, dividends or interest payment to securities
18

holders with names appear on the book at the book closing date. Currently, there are
16 companies authorized to undertake the registrar business, comprising 6 securities
companies and 10 other financial institutions as follows:
Securities Companies
1. Kim Eng Securities (Thailand) Public Company Limited
2. KGI (Thailand) Securities Public Company Limited
3. TISCO Securities Public Company Limited
4. Thanachat Securities Public Companies Limited
5. BFIT Securities Public Company Limited
6. MFC Asset Management Public Company Limited
Other Financial Institutions :1. The Bank of Thailand
2. Thailand Securities Depository Company Limited
3. Bangkok Bank Public Company Limited
4. Bank of Ayudhya Public Company Limited
5. Kasikornbank Public Company Limited
6. TMB Bank Public Company Limited
7. Bankthai Public Company Limited
8. Siam Commercial Bank Public Company Limited
9. Siam City Bank Public Company Limited
10. United Overseas Bank Public Company Limited
According to the ranking of registrars conducted by the ThaiBMA, TMB Bank PublicCompany Limited is the top performer among securities registrars in terms of newly
issued debenture value in 2006, followed by the Siam Commercial Bank PublicCompany Limited (see Table 3).
Table 3:

Corporate Registrar Ranking Jan-Dec (Q1-Q4) 2006 (Only Bond Issue in 2006)

Ranking

Underwriter

No. of Issues

1

TMB Bank Public Company
Limited20

46,887.10

31.31

2

Siam Commercial Bank PublicCompany Limited

15

37,300.00

24.91

3

Thailand Securities Depository
Company Limited

11

36,380.00

24.30

4

BangkokBank
Company Limited

7

16,000.00

10.69

5

Kasikornbank Public Company
Limited4

7,660.00

5.12

PublicSource: ThaiBMA

19

Amount (THB mln)

% Share5. Thailand Securities Depository Co., Ltd (TSD)
TSD is a wholly-owned subsidiary of the Stock Exchange of Thailand (SET)
providing the services for its members in the following areas: securities depository,
security clearing and settlement, securities registration, fund registration and backoffice service bureau.
Regarding securities clearing and settlement, TSD has implemented the Delivery
versus Payment (DvP) method to its clearing and settlement system. It has currently
used the payment method of electronic fund transfers through the settlement banks
and the BAHTNET system of the Bank of Thailand instead of cheques, in order toreduce risk to clearing house, as well as to increase liquidity in the market. In thisprocess, TSD will act as an intermediary between the two settlement banks chosen bymember companies, i.e., the Siam Commercial Bank PCL and the Bangkok Bank PCL,
and the custodians. The process is different pending the type of its membership asfollows:
1. General members (brokers/sub-brokers) : they send/receive the payment to/from
their settlements, which will in turn send /receive that payment to/from the TSD
through the Bahtnet system.
2. Associate members (Custodians) : they send/receive the payment to/from the TSD
through the Bahtnet system.
The TSD also acts as intermediary in securities settlement through the book entry
system.
Figure 7:

Securities Clearing and Settlement Process

Broker 1

Broker 2

Broker 3

Settlement Bank A

Settlement Bank B

TSD
BAHTNET System of the BOT

Custodian

Broker 4

Custodian

Source: TSD

20

Custodian6. Dealer
A dealer is a financial institution licensed by the SEC to trade or underwrite debt
instruments in accordance with the rules and regulations prescribed in the related
SEC Notification. The SEC has stipulated that the company granted debt instrument
trading license must designate qualified trader who has passed the examination andregistered with the ThaiBMA. Currently there are 52 debt instrument dealers,consisting of 11 Thai commercial banks, 8 foreign banks, and 33 securities companies.
7. Investor
Investors are those who trade debt instruments in the secondary market. They canbe either institutional or individual investors. In the Thai bond market, major
investors can be categorized into the following types:
1. Mutual Funds (MFC)
2. Domestic Companies (DCO)
3. Foreign Companies (FCO)
4. Insurance Companies (INS)
5. The Government Pension Fund (GPF)
6. The Social Security Fund (SSF)
7. Individual Investors (IND)
8. Non Dealer License (NDL)
9. The Bank of Thailand (BOT)
10. Others
Figure 8:

Composition of Dealer to Client Transaction in Year 2006
FCO
18%

IND
1%

GPF+SSP
8%

BOT + Othe r
6%

NDL
11%

DCO
12%

MFC
42%
INS
3%

Source: ThaiBMA

21

8. Custodian
A custodian is a bank or financial institution assigned by the mutual fundmanagement companies or other type of clients to keep custody of their assets. In
addition, the custodians also accept, deliver, check and verify the accuracy of assets,
prepare the account of assets in its custody, as well as monitor and arrange to receive
interests and benefits arising from investment in such assets and report to its clients.
Any bank or financial institution wishing to undertake the custodian business inThailand must seek approval from the SEC.
Currently, there are 13 custodians approved by the SEC as follows:
1. Tisco Bank Public Company Limited
2. Citibank N.A. Bangkok Branch
3. Siam Commercial Bank Public Company Limited
4. Bangkok Bank Public Company Limited
5. Kasikornbank Public Company Limited
6. Ayudhya Bank Public Company Limited
7. Siam City Bank Public Company Limited
8. TMB Bank Public Company Limited
9. Phillips Securities Public Company Limited
10. The Hong Kong and Shanghai Banking Corporation Limited
11. Bankthai Public Company Limited
12. Deutsche Bank A.G.
13. Standard Chartered (Thai) Bank Public Company Limited
5. Secondary Market and Derivative Market
5.1 Secondary Bond Market
At present, about 99% of bonds circulated in the secondary market is traded over thecounter (OTC), which involves a private agreement between seller and buyer with nospecific period in trading of bond and no formal market center for trading.

Theremaining 1% of bonds in the secondary market is traded in the exchange market of
Bond Electronic Exchange (BEX), a subsidiary of The Stock Exchange of Thailand(SET). The creation of BEX is to provide retail investors with an additional channel for
debt instruments investment.
For each transaction traded in the secondary market, bond dealers are required by
the SEC to report all bond trading transaction, regardless of trading channels, toThaiBMA within 30 minutes after execution. The ThaiBMA has classified the type ofbond trading transaction reported by dealers into 3 types in order to use the22information for analyzing and monitoring the bond market movement and also to use
as the acceptable reference data.
These transactions are classified as follows:
1. Outright Transaction - a transaction whereby the bonds are bought or sold outrightin the market without any prior committed obligations or conditions.
2. Financing Transaction - a repurchase agreement (repo) transaction using bonds as
collateral.
3. Other Transaction - any other transaction not classified in either of theabove-mentioned categories
Total trading value in the Thai bond market has been growing remarkably over time.
In 2006, the average daily outright trading value was THB 28.5 billion, an impressive
growth of over 300% over the average value of THB 6.47 billion in 2001 (see Figure 9).
Trading transactions mostly focus on government debt securities as Loan Bonds (LB),
Treasury Bills (T-Bills) or State Agency Bonds (SA), while corporate bonds haverelatively less demand in the market.
In 2006, total outright trading value was THB 4,277.50 billion, with state agency
bonds (SA) gaining the highest share in outright trading value, accounted for THB
1,968.20 billion (or 46% of total outright trading value) due to large supply from the
new issuance of the BOT bonds. During 2006, the BOT issued large volume of bonds asa rollover of the previous series which have already matured and also to absorb
liquidity in the market. T-Bill and LB amounted to THB 1,500.30 billion and THB
631.12 billion baht, or capturing 35% and 15% shares of the total outright trading
value, respectively. State owned enterprise (SOE) accounted for THB 83.83 billion (or
2% of the total outright trading value), consisting of THB 51.55 billion guaranteed
SOE bonds, and THB 32.28 billion non-guaranteed SOE bonds (see Table 4).

23

Figure 9:

Average Daily Outright Trading Value vs Outstanding Value

THB Bln.

THB Bln/Day

4,500.00

20

4,000.00

18

3,500.00

16

3,000.00

14

2,500.00

12

2,000.00

10

1,500.00
1,000.00

8

500.00

6

0.00

4
2003

2004

2005

Outstanding

2006

Trading value

Source: ThaiBMA

Figure 10:

Turnover Ratio by Bond Type

Turn Over
160.00All

140.00

Govt

SOE

Corp

2004

2005

2006

120.00100.00
80.00
60.00
40.00
20.00
-

2002

2003

Source: ThaiBMA

24

Table 4:

ThaiBMA Outright Trading Value and Outstanding Value Unit: THB Mln
Type of Securities

2005
Trading
438,157.52
110,079.47
71,928.46
38,151.01
908,448.94
1,282,437.01
77,685.45
394.002,817,202.39
234,766.87
11,498.79
245
40,870.00
3,406
166.8163265
41

GovernmentState Enterprise- Guaranteed- Non Guaranteed
T- Bills
State Agency
Corporate
Foreign
Total Value- Monthly Average- Daily Average- No. of trading days
No. of transactions- Monthly Average- Daily Average
Dealer Participation

2006
Trading
631,117.30
83,832.72
51,554.84
32,277.87
1,500,202.87
1,968,201.76
92,543.82
1,602.01
4,277,500.48
356,458.37
17,602.88
243
52,117.00
4,343
214
40

% change
Trading
44.04-23.84-28.32-15.39
65.14
53.47
19.13
306.6051.84

Source: ThaiBMA

About 70% of outright trading value in the secondary market came fromtransactions between dealers and their clients whereas the remaining 30% was fromtransactions among dealers themselves. In 2006, mutual funds captured the major
portion or 42% of outright trading value between dealers and their clients, followed byforeign investors with a share of 18% and domestic corporations with a share of 12%(see Figure 8).
The top ten member dealers in outright trading in 2006 consisted of six domestic
banks; Kasikornbank (14.57%), Siam Commercial Bank (14.55%), Bank Thai (8.08%),
Bangkok Bank (7.63%), TMB Bank (7.17%), and United Overseas Bank (Thai) Plc(6.54%), and four foreign banks; Deutsche Bank AG (8.81%), Standard Chartered Bank
(7.29%), The Hong Kong and Shanghai Banking Co., Ltd (4.84%), and Citibank
N.A.(4.35%) (see Table 5).
Table 5: Top Ten Active Dealer Member Dealer in 2006
Unit: THB MIn

TMB Bank Plc

Source: ThaiBMA

25

For financing transaction, the trading value in 2006 increased to 35% of total trading
value, compared to 29% in 2005 (see Figure 11). Financing transaction as classified by
ThaiBMA can be divided into 3 sub-categories: Bilateral Repo, Private Repo, and Buy
and Sell Back.
“Private Repo” and “Buy and Sell Bank transactions” are different in practice, thedifferences between these two type of transactions are such that Private Repo
transaction is under Global Master Repurchase Agreement (GMRA) contract and haveto mark to market to maintain the margin during the transaction period while Buy
and Sell Back transaction has no standardized contract and is not required to mark tomarket.
Bilateral Repo, which is the transaction between the Bank of Thailand (BoT) andPrimary Dealers (PD) shared by 78% of the total financing trading value in 2006,
followed by 18% of buy and sell back and 4% of private Repo (see Figure 12).
Figure 11:

Trading Value by Transaction TypeTHB Mln

8,000,000
7,000,000

Other
Financing
Outright

6,000,000
Financing 35%

5,000,000
4,000,000

Financing 29%

3,000,000

Financing 36%

2,000,000
1,000,000
0
2002

2003

2004

Source: ThaiBMA

26

2005

2006

Figure 12:

Composition of Financing Transaction in 2006
Private Re po
4%

Buy and Se ll Back18%

Bilate ral Re po
78%

Source: ThaiBMA

5.2 Derivative Market
The derivative market is financial contract between counterparty in order to buy orsell or swap the underlying securities, which can be equity, bond, currency, orcommodity, at a specific price in a specific period in the future. Currently, thederivative products in Thailand can be divided into four types: Forward, Futures,
Option, and Swap
The first derivative Market in Thailand is the Agricultural Futures Exchange ofThailand (AFET) which was established in 2004 with the first underlying producttraded in this market is the natural rubber ribbed smoked sheet no.3 (RSS3). In 2006,
Thailand Future Exchange (TFEX), the second derivative market in Thailand, wasoperated and the only underlying product traded in this market is the SET 50 Index.
TFEX plans to add new potential products such as bond futures and interest rate
futures in the near future.
Derivative markets in Thailand are at the beginning stage and the underlying
securities are limited to a few products. This leads the derivative product usuallytraded in OTC, in the form of a private agreement. Most of the derivative products are
related to foreign currency or interest rate such as forward and swaps so commercial
banks provide these services as risk management instruments for their clients such asexporters, importers, and foreign loan borrower.
According to the BOT regulations, commercial banks are required to report
outstanding value of derivative transactions at the end of the month to the BOT. It has
been evidenced that the outstanding value of derivative transactions grew significantly
every year, particularly interest rate swap (IRS) which outstanding value has surged
27

by almost two times from 2004 to 2006.
As of December 2006, the outstanding value of derivative transactions was THB
10,841.42 billion, which was higher than the outstanding of domestic bonds (THB
4,085.26 billion) and stock market capitalization (THB 5,046.91 billion) by almost
100%. Outstanding value of derivative transactions at the end of December 2006
consisted of THB 4,700.61 billion of IRS (or 43% of total outstanding value ofderivative transaction), THB 3,710.92 billion of Forward (34%), THB 202.49 billion of
Cross-Currency Option (2%), THB 18.55 billion of Futures (1%) and THB 2,208.86
billion of the rest (20%) (see Figure 13).
Figure 13:

Contingent Liabilities of Commercial Banks

THB Mln
5,000,000
Forward
FuturesInterest Rate Swap
Cross-Currency Option
Others4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-

2004

2005

2006

Source: BoT

Table 6:

Result of the 2004 Triennial Central Bank Survey of Foreign Exchange

and Derivatives Market Activities Daily Average Turnover in OTC Derivative Markets(THB Denominated Instruments)
million USD

April 2001
AmountApril 2004%

Amount%Forward

130

10

396

20

Fx Swap

1,169

89

1,333

67

Cross Currency Swap

14

1

240

12

Option

2

0

10

1

Total

1,315

FRAs

3

33

2

2

IRS

6

67

93

98

Total

9

95

1,324

2,074

Grand Total
Source: BIS

28

1,979

II

Major Impediments to Structured Bond
Market Development in Thailand

1. Supply Factor
The structured bond market in Thailand is still at an early stage of development.
Only a handful of key players are active in the securitization transaction with limited
quantity and variety of securitization projects. Major issues focused as impediments tothe development of structured bond market in Thailand can be concluded as follows:
1.1 Knowledge & Education- Potential originators and issuers in Thailand are not quite familiarized with theconcept of raising fund through securitization. They are not fully aware of utilizing
securitization as an alternative financing method due to inadequate knowledge andunderstanding about the securitization process, in particular concerns about
creditworthiness of the transaction and types of assets to be securitized.
Consequently, the number of securitization deals so far has been limited and theactive players are confined to well-established organizations having more confidence
in securitization through long-term and on-going research on financial innovation.
Notable among them are the Treasury Department of the Ministry of Finance (Theproject of DAD SPV Co., Ltd. - securitization of future cash flows from lease andservice payments to fund the construction of the Government Office Center), private
sector financial institution ( the project of SICCO Special Purpose Vehicle Co., Ltd. securitization of auto hire purchase receivables), and non-bank financial institution
with foreign shareholders or partners with experiences in securitization abroad(Eternal Credit Card Special Purpose Vehicle Co., Ltd. - securitization of credit cards
receivables), etc.
- The securitization market is facing shortage of high expertise personnel, sufficientand quality database, and technological know-how.

Such constraints inevitably

deteriorate investors’ confidence about the accuracy and reliability of financial
forecasts made in packaging the securitization deals. This is especially true in thecase of securitization involving future cash flows to fund the public infrastructure
projects such as the new Government Complex, the subway system, etc. As a matterof fact, there has been only one public sector agency, namely the Treasury
Department, which issued the securitized debts for fund mobilization. It is safe to
say that the success of TD’s securitization deal owed considerably to the substantial
resources and efforts spent in studying the securitization structure and the strong
initiative from the government.

29

1.2 Legal & Accounting Standards- The current legislative framework facilitating the securitization is still deemed notcomprehensive and need to be clarified in certain areas. In addition, there is no
absolute conclusion about the accounting practice for securitization

process; forexample, there is still debate as to whether or not sale of assets or transfer of debts
from the originator to the SPV is treated as a true sale. If this is not considered as atrue sale, the originator will incur additional expenditures and has to consolidate theaccount of the SPV in the balance sheets. Moreover, in the event that the SPV goesbankrupt, the originator is obliged to the pay the debts to investors, which is not thecase of bankruptcy remoteness in general securitization context.
1.3 Complexity of Securitization Process- The process of securitization is complicated and requires concerted efforts of various
expertises. It is not easy for an originator or an SPV to understand thoroughly and to
be convinced that securitization is a better and cost effective alternative for fundraising other than other type of financing such as borrowing form banks or issuanceof straight bonds.
- Even the DAD SPV securitization deal which has received overwhelming support
from the government, the securitization process remain complicated, in particular, inthe process of future cash flow projection.

This is due to the fact that the project

involves a long period of 30 years, it is therefore very difficult to cover all the risks
incurred throughout the life of the securitization program and to identify proper
measures to mitigate and transfer such risks.
1.4 Higher Cost of Financing- The cost involved in issuing structured bonds through securitization process isrelatively high as it is more complicated than the issuance of a straight bond. Highly
skilled and experienced professionals are required for the whole transaction and also
after the sale of the securities.

To mention just a few, the appointment of bondunderwriter, the management of database of the securitized assets, the transfer ofassets to the SPV, the appointment of financial advisor, legal and tax counsel,
servicer, bondholders’ representatives, etc.
- Moreover, to add the creditworthiness of the issue, the issuers need to engage invarious types of credit enhancement measures, such as Over Collateralization,
Reserve Account, Subordination or seeking a Guarantor which is normally theparent company or the originator. This further builds up the cost for securitizationof the originator and the SPV.
1.5 Economy of Scale- For most of the financial institutions that provide auto financing or credit card30

service, their asset size is not large enough to create economies of scale in employing
a large pool of experts to facilitate the securitization transaction. They consequently
turn to other methods of financing such as the issuance of plain debentures orborrowing from banks.
- The attempt to bunch up the mortgage loans of various commercial banks to aappropriate value is also not possible due mainly to two factors:
1. Under the current BIS regulations, housing loans have a risk weight of only 50%
whereas other types of loan involved a risk of 100%.
2. Currently the commercial banking system does not envisage any serious liquidity
problem and has no pressure to offer their housing loans for sale.
- The possibility to collect similar type of housing loans into an appropriate size to
package as Mortgage-backed Securitized bonds is low because these loans areusually of small size and scattered throughout the country. Moreover, there arevarious expenses incurred during the process such as tax payment.
1.6 Data Quality and Management- The issuers do not have an effective database management system for their assets tofacilitate the issuance of structured bonds, especially, data and information aboutcash flows, asset quality, and risk exposures of the assets. Such information isessential for the credit rating procedure. Without such information, theoriginator/issuer has to place higher collateral which leads to higher cost of issuance.
- A number of infrastructure projects in Thailand still have insufficient plan incompiling and managing systematic and long-term data and information regarding
their future receivables, for example, fares of underground trains, toll fees of
expressways, etc. Such data and information is helpful in making accurate future
cash flow projection and is essential for credit rating. Without adequate data andinformation, the issuer may have to face unnecessary high credit enhancement costs.
2. Demand Factor
Major constraints to the expansion of investor base for structured bond market in
Thailand include the following issues:
2.1 Knowledge & Education- Institutionalandindividual

investors

haveinsufficientknowledge

andunderstanding about structured bonds, either in the context of product features,
return, risks, especially the issue of using future flows to back the securitization.
Regarding the case of DAD SPV securitization deal which was offered both on thebasis of private placement and public offering, all related parties involved in the deal
including the issuer and underwriters have to make great efforts in explaining the31

features to target investors. It is recommended that a central unit responsible for theeducation of this type of securities is necessary to help expand the potential investorbase.
2.2 Product Size and Diversity- The value of structured bonds backed by auto loan receivables and credit card
receivables offered for sale is relatively small. In 2006, total value of structured
bonds which registered with the ThaiBMA amounting to only THB 10,200 million
with the tenor ranging from 3-5 years. This resulted in limited liquidity as major
investors such as insurance companies, pension fund, mutual funds companies
which hold large investment portfolio, usually buy these securities and hold them
until maturity.
2.3 Risks- There is limited diversity of structured bonds offered for sale in each tranche. In
2006, most of the structured bonds which involved auto loan receivables and credit
card receivables are assigned AAA (Thai) ratings and the similar level of return, i.e.,
coupon rate of 5.73-6.00% for auto loans; and coupon rate of 5.73-5.88% for credit
card. As a result, investors do not have much options in managing their investment
portfolio to meet their return target at the acceptable level of risk exposure.
2.4 Services- Investors may lack confidence in investing in structured bond due to the fact thatthe servicer does not have adequate database system management which leads tothe inefficiency of asset quality monitoring and present value of guaranteed assets- The rate of servicing fee is relatively high and there is no maximum ceiling.
Therefore, the investors are not able to estimate the real cost of investment.
Currently there is limited number of servicers and investors have little choice inchoosing an efficient servicer.
- Although information disclosure at the initial process is adequate, the performance
report of the project is limited to a group of investors. Investors have to seek suchinformation from the servicers on a case by case basis.
3. Intermediary
3.1 Technological Know-how- There are only few underwriters with skills and experience in the securitization of
structured bonds (according to the ThaiBMA ) for example, the Siam Commercial
Bank PLC as expertise in auto loan securitization, whereas Siam Commercial Bank
PLC and Citicorp, Inc have good experience in credit card securitization.
32

- The deal of DAD SPV involved 3 commercial banks as underwriters, namely,
Bangkok Bank PLC, TMB Bank PLC, and The Hong Kong and Shanghai Banging
Corporation Ltd. The project is a pool of strength of the 3 banks either in the areas oftechnological know-how, distribution channel through branch offices, and the wide
potential investor base.
- The underwriting of securitized debentures is relatively difficult especially when
underwriting the issues among foreign investors. This is because the credit ratingsin Thailand do not conform to the international standard. Despite a high rating ofAAA, there is no guarantee that the issues are sold out among foreign investors.
3.2 Knowledge & Education- It is not easy for the underwriter to convince the originator to issue securitized bonds
as the originator do not have adequate knowledge and understanding about such
issue. In addition, the underwriter has to educate the originator about databasesystem management which is essential in obtaining an AAA credit rating. It is also
recommended that Thailand should have a central unit to act like a credit bureau inorder to collect and manage relevant data and information and utilize suchinformation to rate the assets used as collateral.
- To persuade and educate investors regarding the separation of SPV from servicer ororiginator is difficult as Thailand has insufficient track records in the past to clearlysupport the issue.

33

Table 7:

Issuer, Underwriter and Outstanding Value of Structured Bonds
as of February 17, 2007

Source: ThaiBMA
Note: SCB = Siam Commercial Bank Plc; SCBT = Standard Chartered Bank Thailand ; CST =Citicorp Securities (Thailand) Ltd.; BBL = Bangkok Bank Plc ; TMB = Thai Military Bank
Plc.; HSBC = The Hong Kong And Shanghai Banking Corporation Limited.

4. Legal / Regulatory Factor
4.1 Accounting Issue- Thailand does not have clear accounting standard for the transfer of asset from theoriginator to the SPV. This depends on the judgment that whether it is the sale ofasset or the secured financing. As a result, in the case that the originator wishes totransfer the assets off balance sheet through the process of securitization, they haveto judge that whether or not the SPV have to consolidate its account with theoriginator.
4.2 True Sale
- The definition of true sale is still unclear and there are no specific conditions for thedetermination of a real true sale transaction. Particularly, the sale of debts orreceivables can be performed in many different ways and each of them has different
method of accounting record. Without a standardized accounting practice, the newissuers of securitized bonds are reluctant to enter into the market since they areaware that any change of policies or regulations in the future might affect thenormal accounting practice they have previously judged.
- The unclear definition of true sale leads to the problem of consolidation since in the
securitization process the originator will transfer assets to SPV in order to deduct

34

those assets out of the balance sheet of originator. Therefore, if the transfer of asset
is defined as true sale, the balance sheet of the SPV does not have to be consolidatedwith the originator’s balance sheet.
- At present, the Thai Civil and Commercial Code do not bear the right of claim in
assets which are securitized and also not facilitate the definition of true sale. This
leads to the problem of bankruptcy remoteness.
- The Bank of Thailand’s Notification issued on September 21, 2006 which permits
commercial

banks

to

undertakesecuritizationtransaction

stipulatedthat

commercial banks or financial institutions acting as the originator shall not havecontrol over the transferred assets. Also, if the originator goes bankrupt, accountpayable of the originator has no rights to claim for those transferred assets.
However, this notification regulates only commercial banks and financial
institutions which have high liquidity and usually have no need to raise fundthrough securitization. The regulation does not cover other non-financial institution
issuers.
4.3 Regulation- Currently Thailand does not have laws pertaining directly to the placement ofcollateral and there is no legislation facilitating the guarantee of the SPV status ineach securitization process. This situation fails to persuade issuers to raise fundthrough securitization. Another limitation is that the only law governing
securitization in Thailand is the Emergency Decree on Special Purpose Juristic
Person for Securitization, B.E. 2540 or the so called Securitization Act. Therefore,
the issuance of securitized bonds in Thailand has to conform with the Securitization
Act and other related legislations. This is complicated comparing with othercountries which have comprehensive securitization laws.
- The Bank of Thailand’s capital control measures announced in December 2006
unfavorably affected the bond market as the rate of return of debt instrument has
been raised higher and the cost of debenture issuance is consequently pushed up.
This inevitably affects the issuance of securitized bonds which have a much more
complicated structure.
4.4 Recourse- Laws governing the appointment of bondholders’ representative in the case of
securitized debentures are still not clear-cut.

Investors therefore are not confident

in making investment in such securities since investors want the bondholders’representative to perform with fiduciary and care for their interest and benefits andact on their behalf in the event of payment default.
- Currently there is no Trust Law which allows the separation of assets between theoriginator and the SPV. Accordingly, in the event that either the originator or the35

SPV goes bankrupt, investors have difficulty in claiming their debts.
4.5 Others- The conditions under the agreements of related parties are not standardized. The
drafting of each agreement relies mainly on the benefits of each party concerned.
This discourages issuers without legal expertise to issue this type of structured bonds.
- The securitization of mortgage loan usually involves receivables which are scatteredthroughout the country. The pledge registration process therefore is time consuming.
5. Market Infrastructure
5.1 Credit Rating Agency- The number of authorized credit rating agencies in Thailand is limited and there islack of technological know-how in assigning credit rating for structured bonds. As aconsequence, the issuer has limited choice and the effort to issue securities with highcredit rating may involve significantly high cost in making credit enhancement.
- The local credit rating agencies have insufficient expertise in the legal aspect of
securitization. They have to hire legal advisor in rating the new securitized issues
which resulted in longer time consumed.
5.2 Credit Enhancing- The Thai structured bond market is still young and the number of issuers is too
small to attract experienced and credit worthy companies abroad to undertake thecredit enhancement/guarantee businesses in Thailand. The transfer of technologicalknow-how from such companies will help promote the structured bond market in
Thailand.
- There are still inadequate credit enhancements in Thailand. Such credit
enhancements comprise internal credit enhancement (over-collateral) and external
credit enhancement (the appointment of monoline to guarantee the debt issuance).
As a matter of fact, it is lack of local companies to provide the service of monoline forthe securitization transaction in Thailand for the moment.
5.3 Information- Currently there is no standard for the valuation of every type of securitized debt
instruments. Therefore, investors, particularly investment funds, are reluctant toinvest in these securities, especially when there is an event of payment default andthe funds are not able to mark the instruments at fair value in their portfolio.
- The bond market in Thailand does not have any reference product with a maturity of
up to 20 years. This discourages the parties involved in the securitizationtransaction, such as issuer, underwriter or investor to confidently issue or invest in36

very long-term debt instruments. The obstacle does not only pertain to thesecuritized debentures but also long-term corporate debentures.
- Limited information disclosure is the major hindrance for the expansion of investor
base. At present, important information such as performance of the project is only
available on request.
6. Other Impediments- As there are many parties involved in different process of securitization, a neutral
agency is needed in evaluating the performance of each involving party in complying
with the agreements or condition set forth in the prospectus. Such an evaluation will
enhance the confidence of investors of the securitized debentures.
- The Credit Bureau which is the central agency of data and information regarding
creditworthiness of bank borrowers and credit card holders in Thailand has noteffectively utilized the relevant data and information in research and analysis. The
effective use of such data and information will certainly support the issuance of
securitized bonds.
- There is a lack of acceptable central agency responsible for the compilation andmanagement of database for the used cars market and the second mortgage market.
This is essential for the issuer of structured bonds to use standards in assessing thevalue of securitized assets as well as the quality of assets throughout the life of the
project.
- The current unstable political environment together with unpredictable economic
direction is not favorable for the issuance and investment of securitized debentures.
- Investors of the securitization debentures are subject to the same tax rate as othertypes of corporate debentures, i.e., 15% withholding tax, while on the other handinvestment in government securities is tax exempt.

37

III

Prospects and Policy Recommendation

1. Prospects for Future Structured Bond Market in Thailand
1.1 Supply
1. Banks are the major sources of assets to be sold for securitization. At present,banks have no problems with liquidity and risk weight on loans especially housing
loans, which require only 50% for capital requirement. Banks may face challenges
in the future when applying IAS 39, Basel II, having higher defaults on loans aswell as competing for deposits with mutual fund companies. These might force
banks to sell off some assets for securitization in order to reduce their risks and tomeet with new rules on capital requirements.
2. From Figure 14, the growth of securitization on auto loans and credit card loans
will continue to increase, since there is enough spread, the difference between
lending rate and costs of funding through securitization. In Thailand, this spread isaround 1.5% to 2%. So, there would be enough rooms for issuers to hire legal
counsel, underwriter, etc. in issuing securitization bonds. Moreover, issuers are
non-bank financial institutes which have limitations on acquiring funds throughdepositing directly from consumers or general public.
3. There would be less attractive to issue securitization bond using housing loanscomparing with auto loans or credit cards. The major difficulties are low spread or
no spread (the different between lending rate and costs of funding throughsecuritization), floating interest rate after 3 years of lending, and uncertainty inprojecting cash flows due to defaults, prepayment, etc. Low spread of housing loans
is due to competition among banks and finance companies. So, the effective market
lending rate is low comparing to auto loans or credit cards.
4. Normally in Thailand, interest rate charged on housing loans is fixed for the first 3
years of lending and then will be floated in accordance to financial market
situations. Therefore, it is difficult to project the quality of assets or their future
cash flows accurately after 3 years, due to delay, defaults or prepayment. There are
no good records on housing loans for tracking and analyzing of their performancethroughout the whole term of lending, which means the certainty on future cash
flows.
5. So, there are doubts over the prospects on Asset Backed Securitization (ABS) using
housing loans. Nevertheless, the Government Housing Bank announced that they
were considering issuing securitization bonds on housing loans (website ofPrachachart Thurakit Newspaer, 27 January 2007). The issue size will be THB 40
billion and the time duration is 3 to 10 years. The purposes are to diversify source of38

funding of the Government Housing Bank as well as to develop long-term products(10 to 20 years) for their customers.
6. In Thailand, there are less likely to issue securitization bonds on future cash flows
of infrastructure projects in the near future due to insufficient future cash flows
from the projects after operation and agreements on sharing of future cash flows
between investor and operator. For instance, BTS sky train in Bangkok has been in
operation around 10 years. However, the number of daily passengers has not yet
reached its break-even point of 600,000 passengers/day yet.
7. In addition to uncertainty on time duration of future cash flows to reach its
break-even point, at the moment there remains uncertainty in regard to how the
future cash flows would be shared between investor and operator of theinfrastructure project. These uncertainties give more difficulties on the new 5
railway mass transit systems in Bangkok and Metropolitan areas using
securitization for funding of such projects. If these difficulties are resolved together
with good track records, the time duration of such securitization bonds would bevery long probably around 30 years. Comparing to DAD SPV Co., Ltd. project ismuch more secured since the government is the sole tenant and pays rents using
government budget.
8. There would be more opportunities to do securitization on commercial real estate
like shopping malls or office buildings. Since, these projects are able to generate
future cash flows or incomes to reach break-even point in shorter time, possibly
within 10 years. In addition, if issuers are mutual fund companies to issue in formof unit trust, there would be tax exemption on investment as well.
Figure 14:

Issue Size of Structured Bonds, 2004-2006
Issue size

18,00016,00014,00012,00022.20%.

23.81%
12.70%

10,300

2,933

10,000

2,280

8,000
6,000
4,000

1,500
800

2,000

2,000

4,000

4,000

2004

2005

8,000

0
Depository Receipt

Auto Loan

Credit Card

2006
Future Cash Flow

Structure Note

Source: ThaiBMA

9. The Securities Exchange Commission (SEC) of Thailand has completed the draftsof two Acts, which are an Act for amendment to the Royal Decree on Special

39

Purpose Company for Transactions in Securities Markets B.E. 2540, “Securitization
Act”, and a Trust Act for Transactions in Securities Markets, “Trust Act.” At the
moment, these two Acts have been submitted to the Ministry of Finance and are inlegislation process. When they are amended, the definition of Securitization, legal
entity of Special Purpose Company (SPC), duties and the rights of SPC would be
more clear-cut and very much facilitate the securitization process in Thailand. In
addition, the Federation of Accounting Professions is currently in the process of
issuing accounting guidelines for recoding securitization transactions, regardingtransferring or receiving of assets or assets pledged as collaterals between theoriginator and SPC. The major impediments to the Thai securitization market
regarding True Sale, Bankruptcy Remoteness, and Recourse are expected to beresolved when these laws together with the new accounting guidelines are put inplace. Such developments will certainly accelerate the development of thestructured bonds or securitization market in Thailand into the next stage.
1.2 Demand
1. The factors that are influencing the prospects on demand for structured bond in
the Thai market are as the following:- Education- Dissemination of information- Quality of assets- Infrastructure
2. Most of investors in debts market are institutional investors, such as mutual
funds, pension funds and insurance companies, rather than individuals or retailinvestors. Normally, institutional investors invest around 70% of their funds in
debts market. Due to lacking of knowledge and understanding on securitization
bonds, institutional investors more likely to invest in straight bonds. To convince
investors to invest in securitization bond, in some cases, underwriters have to
explain about the product features to investors in an one-on-one manner. In the
future, there will be more market players in debts market, if SEC liberalizes
mutual fund industry in 5 years.
3. For knowledge and education, the Thai Bond Market Association (ThaiBMA), theAssociation of Investment Management Companies (AIMC), and the Stock
Exchange of Thailand (SET) are three major institutions to provide knowledge
regarding debts market and their new instruments regularly.
4. From 2005 to 2006, trading volume on outstanding debts of foreign investors had
increased from 3% to 12%, due to better information dissemination, investors’
confidence and attractive returns. Recently, investments from foreign investors
have dropped since BoT’s policy on 30% reserve on capital inflow into Thailand.
However, this would be temporary incident when BOT relax such policy for better
40Thai economy as well as political stability in the near future.
5. Especially for new structured bond products, quality of assets to be backed for
issuing bonds would be another concern of investors additional to coupon rate,receive of principal on maturity date, etc. Since there were little information or
no good track records for investors to analyze risks inherently to quality ofunderlying assets.
6. To increase confidence among both Thai and foreign investors, monoline
insurance or guarantor of securitization bonds either in full or partial for the
purpose of credit enhancements would be one mechanism in debts market
development plan considering by related Thai regulators. This will push growthin Asset Backed Securitization (ABS) market.
2. Policy Recommendation to Improve / Develop the Structured Bond Market in Thailand
1. Since the major players in the Thai market are commercial banks, the BOTshould play more active role in motivating and facilitating banks to manage risks
by utilizing their assets through securitization. For instance, BOT would giverisk weight of MBS with good credit enhancements lower than underlying assets.
However, the Securities Exchange Commission (SEC) has been playing an activeroles in elevate legal and accounting impediments and facilitate issuers to supply
more structured bonds into the market as well as to increase investor basethrough private placement and public offering channels.
2. Government should continue on in providing good infrastructures for issuing
securitization bonds, such as trust law for non-taxable SPVs or entities,
expansionofinvestors’

base

via

mandatory

retirement

funds,

creditenhancements, etc. Moreover, government should set more examples and givecontinuing supports in resolving impediments by issuing securitized bonds tofund infrastructure projects as of DAD SPV Co., Ltd. project. Supports from thegovernment like Cagamas in Malaysia and Ginnea Mae or Fannie Mae in the
USA would be good examples and successful cases for Secondary Mortgage
Corporation (SMC) of Thailand.
3. There should be more number of organizations in each role of securitization
process, such as credit rating agencies, credit enhancers, servicers, etc. So,
originator would have more choices to ask for services to fit their needs. Moreover,competition among them would give better improvement on technologicalknow-hows and services. For instance, currently we have one credit agency inThailand, Fitch Ratings, who have international experience and know-hows inproviding credit rating for securitization bonds.
4. Government, related agencies as well as universities should join hands inproviding more education and technological know-hows regarding securitization
41

bonds and market on regular basis to issuers, investors, underwriters, credit
rating agencies, servicers, etc.
5. Last but not the least, most of home mortgages in Thailand are adjustable
mortgages depend upon the movement of interest rates in the future. Credit
bureau should utilize their invaluable assets which are credit information of all
borrowers in Thailand. This information can be used to calculate for dynamic
default rate, patterns of defaults for the whole lending term, cumulative defaults,
etc. The results of these analyses would be very much beneficial for originator,
issuer, credit rating agency, pricing agency as well as investors in both primaryand secondary markets. For instance, credit rating agency would better project
default rate or expected loss of assets. So, there would be lower requirements on
over-collaterals for credit enhancements by originator, which mean lower costs offunding through securitization.

42

List of Contributors
Underwriter:
Narumol Noi-am
Senior Vice President
Corporate Finance Department 1
TMB Bank PCL
3000 Phaholyothin Road, Chatuchak,Bangkok 10900, Thailand
Jinda Chobpattana
SVP, Product Manager, Financial
Services
Siam Commercial Bank
Financial Market Products
9th Fl. Zone B, 9 Ratchadapisek Rd.,
Jatujak, Bangkok 10900, Thailand
Montri Upathambhakul
Assistant Vice President
Investment Banking, Financial Services
Siam Commercial Bank
9th Fl. Zone B, 9 Ratchadapisek Rd.,
Jatujak, Bangkok 10900, Thailand

Apinan Apasiripol
Vice President, Debt Finance andAdvisory
Global Investment Banking
The Hongkong and Shanghai Banking
Corporation Limited
HSBC Building, 968 Rama IV Road,
Silom, Bangrak, Bangkok 10500,
Thailand
Suraphan Purnagupta
Senior Vice President
Investment Banking Group
Bangkok Bank PCL
333 Silom Road, Bangkok 10500,
Thailand
Kanet Buranasin
Vice President
Investment Banking Group
Bangkok Bank PCL
333 Silom Road, Bangkok 10500,
Thailand

Jitkasem Wetwatana
Thanapol Chumjai
Assistant Vice PresidentManager, Treasury Product Development, Vice President
Corporate Finance Department
Treasury Market Division
Bangkok Bank PCL
Siam Commercial Bank
333 Silom Road, Bangkok 10500,
10th Fl. Zone A, 9 Ratchadapisek Rd.,
ThailandJatujak, Bangkok 10900, Thailand
Sombat Jiwariyavej
Vice President
Treasury Product Development
Siam Commercial Bank
10th Fl. Zone A, 9 Ratchadapisek Rd.,
Jatujak, Bangkok 10900, Thailand

Investor:
Singha Nikornpun
Duputy Secretary General
Government Pension Fund
990 Rama IV Road, 4th Floor
Bangkok 10500, Thailand

Prakob Phiencharoen
Head of Debt Capital Markets
Global Capital Markets
The Hongkong and Shanghai Banking
Corporation Limited
HSBC Building, 968 Rama IV Road,
Silom, Bangrak, Bangkok 10500,
Thailand

Chutimas Sivamard
Director - Investment Research
Department
Government Pension Fund
990 Rama IV Road, 4th Floor
Bangkok 10500, Thailand
Sornchai Suneta
Associate Director - Fixed Income
Investment Department
Government Pension Fund
990 Rama IV Road, 4th Floor
Bangkok 10500, Thailand

43

Credit Rating Agency:
Watana Tiranuchit
Senior Executive Vice President
TRIS Rating Co., Ltd.
Silom Complex Building, 24 Floor,
Room No.2,
191 Silom Road, Bangkok 10500,
ThailandSuchada Pantu
Deputy Vice President, Credit Rating
Department
TRIS Rating Co., Ltd.
Silom Complex Building, 24 Floor,
Room No.2,
191 Silom Road, Bangkok 10500,
ThailandCredit Rating Agency:
Yingyong Chiaravutthi
Assistant Manager, Credit Rating
Department
TRIS Rating Co., Ltd.
Silom Complex Building, 24 Floor,
Room No.2,
191 Silom Road, Bangkok 10500,
Thailand
Clearing and Settlement Agency:
Nantirat Chavalitleka
Vice President
Clearing House Department
The Thailand Securities Depository
Co., Ltd.
The Stock Exchange of Thailand Building
62 Ratchadapisek Road, Klong Toey,
Bangkok 10110, Thailand

ThaiBMA’s Dealer Members
No.
1
2
3
4

Name
ABN-AMRO BANK N.V.
(ABNA)ADKINSON SECURITIES
PLC. (ASL)
APEX Securities Co., LTD.
(APEX)ACL Securities Company
Limited (ACLS)

5AYUDHYA SECURITIES
PLC. (AYS)

6BANGKOK BANK PLC. (BBL)

7

Bank of America National
Association (BofA)

8

United Overseas Bank (Thai)
PLC. (UBOT)BANK OF AYUDHYA PLC.
(BAY)
Barclays Capital Securities(Thailand) Limited (BARCAP)

9
10
11

BFIT Securities Co.,Ltd(BSEC)

12

BNP Paribas, Bangkok Branch(BNPP)BT SECURITIES CO.,LTD(BT Sec)

13
14
15
16

Calyon, Bangkok Branch(Calyon)CAPITAL NOMURASECURITIES PLC. (CNS)
CITI BANK, N.A. (CITI)

17

CITICORP SECURITIES(THAILAND) LTD. (CST)18

DBS Vickers Securities(Thailand) Company Limited.
(DBSV)DEUTSCHE Bank AG,
Bangkok Branch (DBBK)Far East Securities Company
Limited (FES)

19
20
21

FINANSA SECURITIES LTD.
(FSL)

Address
3th- 4th Floor,Bangkok City Tower,179/3 South Sathorn Rd., Bangkok 10120
Phone: 679-5900 Fax : 679-5908 Website : http:// www.abnamro.com
2nd Floor. Sindhorn Bldg., 132 Wireless Rd., Lumpinee, Bangkok 10330
Phone: 263-3733 Fax: 254-2171 Website http:// www.adkinsononline.com
1st Floor, Sindhorn Building,132 Wireless Rd. Lumpini ,Pathumwan, Bangkok
10330 Phone: 256-7888 Fax: 256-7899
18Th Floor, The Offices at Central World, 999/9 Rama I Rd., Patumwan,
Bangkok 10330
Phone : 658-9000 Fax: 658-9179 Website http:// www.acsec.co.th/
12th Floor, The Offices at Central World , 999/9 Rama I Rd., Patumwan,
Bangkok 10330
Phone : 02-658-6767 Fax: 02-263-0408 Website http:// www.ays.co.th
9th Floor ,333 Silom Rd., Bangkok 10500
Phone: 231-4333 Fax: 236-8278 Website http:// www.bangkokbank.com
All Seasons Place ,CRC Tower ,33rd Floor, 87/2 Wireless Rd,Pathumwan
Bangkok 10330 Phone : (66) 0-2305-2900 Fax(66) 2305-2809
Website http:// www.bankofamerica.com
7th Floor,191 South Sathorn Rd. Bangkok 10120
Phone : 213-2601-3 Fax: 285-1375 Website http:// www.BankAsia4u.com
1222 Rama III Rd., Bang Pongpang Yannwa Bangkok 10120
Phone : 296-2000 Fax: 0-2296-4829 Website http:// www.krungsri.com
21st Floor, CRC Tower, All Seasons Place, 87/2 Wireless Road,.Phatumwan,
Bangkok 10330.
Phone: 0-2686-1912 Fax: 0-2686-1903 Website http:// www.barcap.com
191 Silom Complex Building 14th Fl. Room A 16th Fl. Room B-C ,1-4 SilomRoad,Silom,Bangrak,Bangkok 10500
Tel: (66) 0-2200-2000 Fax: (66)0-2632-0191 Website : http://www.bfitsec.com
29 Abdulrahim Place, 990 Rame IV Road, Bangrak, Bangkok 10500
Phone : 0-2636-1900 Fax: 0-2636-1935 Website : http://www.bnpparibas.com
44 BankThai Bldg., G Floor 24-26 Soi Langsuan,Ploenchit Rd., Lumpini,
Bangkok 10330
Phone : 0-2657-9000 Fax : 0-2657-9822 Website: http://www.BTsecurities.com
152 Wireless Rd., Bangkok 10330
Phone : 0-2651-4590-2 Fax : 0-2651-4593 Website : http://www.calyon.com
21/3 Thai Wah Tower, Ground Floor, South Sathorn Rd.,Bangkok 10120
Phone : 0-2285-0060 Fax : 0-2285-0886 Website : http://www.cns.co.th
18th Floor, 82 North Sathorn Rd., Bangrak, Bangkok 10500
Phone : 0-2232-2000 Fax : 0-2639-2564
Website : http://www.citibank.com/thailand
21st, 22nd Floor, Citibank Tower, 82 North Sathorn Rd., Silom, Bangrak,
Bangkok 10500
Phone : 0-2232-2200 Fax : 0-2639-2269 Website : http://www.citygroup.com
989 Siam Tower, 14th – 15th Floor, Rama 1 Road, Pathumwan, Bangkok 10330
Phone :0-2657-7000 Fax : 0-2658-1258 Website : http://www.dbsvitrade.com
208 Wireless Rd., Bangkok 10330
Phone : 0-2651-5000 Fax : 0-2651-5210 Website : http://www.db.com
18th , 38th , 39 th Floor, CRC Tower, All Seasons Place , Wireless Rd.,
Lumpini, Patumwan Bangkok 10330
Tel. 0-2648-1111 Fax. 0-2648-1000 Website : http://www.fes.co.th
12nd Floor , 48/22-23,48/45-46 Tisco Tower North Sathorn Rd. Bangkok 10500
Phone : 0-2697-3700 Fax : 0-2266-6688 Website : http://www.finansa.com

44

No.
22

Name
GLOBLEX SECURITIESCO.,LTD (GLOBLEX)

23

THE HONGKONG AND
SHANGHAI BANGKING
CORP., LTD. (HSBC)I V Global Securities Public
Co.Ltd. (IVG)
J.P.MORGAN SECURITIES(THAILAND) LIMITEDKASIKORNBANK Plc

24
25
26
27
28
29

KGI SECURITIES(THAILAND) PLC. (KGI)KIATNAKIN SECURITIESCOMPANY LIMITED. (KKS)KIM ENG SECURITIES(THAILND) LTD. (KEST)

30

Thanachart Securities PublicCompany Limited (TCAP)

31

Phatra Securities Company
Limited (Phatra)

32

SCB SECURITIES CO.,LTD.
(SCBS)

33

SEAMICO SECURITIES PLC.
(Z-MICO)34

SIAM CITY BANK PLC.
(SCIB)
Siam City Securities Co., Ltd.
(SCIBS)

35
36
37

SIAM COMMERCIAL BANK
PLC. (SCB)
SICCO SECURITIES PCL.
(SSEC)

38

Standard Chartered Bank
(Thai) Plc.

39

Syrus Securities Company
Limited (SYRUS)

40

TMB Bank Plc.

41

TISCO Bank Public Company
Limited (TISCO)
TRINITY SECURITIESCO.,LTD.

42
43

UBS SECURITIES CO.,LTD.
(UBS)

Address
87/2 , 12 th Floor, CRC Tower All Seasons Place, Wireless Road, Bangkok
10330 Phone : 0-2672-5999 Fax. 0-2672-5956
Website :http://www.globlexsecurities.com
HSBC Building, 968 Rama IV Road, Silom, Bangrak, Bangkok 10500 Phone :0-2614-4000 Fax : 0-2632-4900 Website : http://www.hsbc.com
Mercury Building, 17th - 18th Floor, 540 Pleonchit Rd., Patumwan, Bangkok
10330 Phone : 0-2658-5800 Fax: 0-2658-5799
20 North Sathorn Rd.,3rd Fl., Silom Bangrak Bangkok 10500
Phone : 0-2684-2600 Fax : 0-2684-2720 Website : http://www.jpmorgan.com
1 Soi Thai Farmers Bank, Ratburana Rd., Bangkok 10140
Phone : 0-2470-3042-7 Fax : 0-2871-3637
Website : http://www.kasikornbank.com
United Center Building 23 Fl., 323 Silom Rd., Bangkok 10500 Phone :231-1111 Fax : 0-2267-8315 Website : http://www.kgi.co.th
7th - 8th Floor, Amarin Tower, 500 Ploenchit Rd., Patumwan
Phone : 0-2680-2222 Fax : 0-2256-9783 Website : http://www.kks.co.th
20th Floor, The Offices at Central World, 999/9 Rama I Rd., Patumwan,
Bangkok 10330 Phone : 0-2658-6300 Fax : 0-26586855
Website : www.kimeng.co.th
14th , 18th , 19th Floor, MBK Tower 444 Phayathai Rd., Patumwan, Bangkok
10330 Phone : 0-2217-8888 Fax : 0-2217-9814
Website : http://www.thanachartsec.co.th E-mail : natsec@asiaaccess.net.th
16th Floor, Mueng Thai-Phatra Bldg. 1, 252/6 Ratchadapisak Rd., Huai
Khwang Bangkok 10320 Phone : 0-2275-0888Fax : 0-2693-2353
Website : http://www.phatrasecurities.com
2nd Floor, Sindhorn Bldg., Tower III, 130-132
Wireless Rd., Patumwan Bangkok 10330 Phone : 0-2686-2000 Fax : 263-3808
Website : http://www.scbs.com
15th , 17th , 21st Floor, Liberty Square, 287 Silom Rd., Bangrak, Bangkok
10500 Phone : 0-2695-5000 Fax : 0-2695-5004
Website : http://www.seamico.co.th1101 New Petchburi Rd., Makhasan, Rachatavee, Bangkok 10400
Phone : 0-2208-5000 Fax : 0-2651-7856 Website : http://www.scib.co.th
9th Floor, The Offices at Central World, 999/9 Rama I Rd., Patumwan,
Bangkok 10330 Phone. 0-2624-8888 Fax. 0-2624-8899
Website : http://www.scis.co.th
9th Floor, 9 Ratchadapisak Rd., Lat Yao, Chatuchak, Bangkok 10900
Phone : 0-2544-1111 Fax : 0-2544-3316 Website : http://www.scb.co.th
1st , 2nd , 6th Floor, Sindhorn Tower II and 12th Floor, Sindhorn Tower III
130-132 Wireless Rd., Lumpini, Patumwan, Bangkok 10330
Phone : 0-2627-3100 Fax : 0-2263-2043 Website : http://www.ssec-online.com
90 North Sathorn Road, Silom, Bangrak Bangkok 10500
Phone : 0-2724-4000 Fax : 0-2236-1963
Website : http://www.standardchartered.com/th
12nd, 15th ,17th and 18th Floor, Alma Link Building 25 Soi Chidlom,
Ploenchit Lumpini, Patumwan Bangkok 10330
Tel. 0-2646-9999 Fax. 0-2646-9889 Website : http://www.syrus.co.th
8th Floor, 393 Silom Rd., Bangrak Bangkok 10500
Phone : 0-2230-5692-3, 0-2230-5030 Fax : 0-2230-5788
Website :http://www.tmbbank.com
4th Floor, Tisco Tower 48/8 North Sathorn Rd., Bangkok 10500
Phone : 0-2633-6000 Fax : 0-2633-6800 Website : http://www.tisco.co.th
25th floor, Bangkok City Tower, 179/109-110 South sathorn Rd.,
Tungmahamek Sathorn Bangkok 10120
Phone : 0-2286-3999 Fax : 0-2286-8444 Website : http://www.trinitythai.com
2nd Floor, 93/1 Diethelm tower A, Wireless Road, ,Patumwan Bangkok 10330
Phone : 0-2651-5700 Fax : 0-2651-5731 Website : http://www.ubs.com

45

No.
44

Name
UNITED SECURITIES PLC.
(US)

45

UOB Kay Hian Securities(Thailand) CO., LTD(UOBKHST)
JPMorgan Chased Bank, N.A.
(JPMCB)
Krung Thai Bank PCL. (KTB)

46
47
48

Bankthai Public Company
Limited (BT)49

Bualuang Securities Plc. (BLS)50

ICAP Securities Co., Ltd.
(ICAP)
Wall Street Tullett Liberty
Securities Limited
Asia Plus Securities Plc.(ASP)

51
52

Address
6th Floor, Grand Amarin Tower, 1550 New Petchburi Rd., Rachatavee,
Bangkok 10320
Phone : 0-2207-0038 Fax : 0-2652-8977 Website : http://www.unitedsec.com
3rd Floor, Sindhorn Bldg., Tower I, 130-132 Wireless Rd., Patumwan Bangkok
10330 Phone : 0-2659-8000 Fax : 0-2263-2306
Website : http://www.uobkayhain.co.th
20 North Sathorn Rd.,3rd Floor, Silom Bangrak Bangkok 10500
Phone : 0-2684-2693 Fax: 0-2684-2690
35 Sukhumvit Road, Klong Toey Nua Subdistrict, Wattana District, Bangkok,
10110 Website: http://www.ktb.co.th
44 North Sathon Road , Silom , Bangrak , Bangkoko 10500
Phone : 0-2633-9000-3 , 0-26338-8000 Fax: 0-2633-9026
Website: http://www.bankthai.co.th
29/f Silom Complex Off.Bldg. 191 Silom Road , Bangrak , Bangkok 10500
Phone: 0-2231-3777 , Fax: 0-2632-0777 Website: http://www.bualuang.co.th
29/f Silom Complex Off.Bldg. 191 Silom Road , Bangrak , Bangkok 10500
Phone: 0-2231-3777 , Fax: 0-2632-0777 Website: http://www.bualuang.co.th
33/64 Wall Street Tower, 13th Floor, Surawong Road, Bangrak, Bangkok
10500 Phone: 0-2266-8889 Fax: 0-2632-7375
3/1 rd Floor, Sathorn City Tower , 175 South Sathorn Road, Sathorn, Bangkok
10120
Phone: 0-2285-1949 , 0-2680-1290 Fax: 0-2679-5134 http://www.asiaplus.co.th46

JAPAN BANK FOR INTERNATIONAL COOPERATION (JBIC)
http://www.jbic.go.jp/
4-1, Ohtemachi 1-Chome Chiyoda-ku, Tokyo 100-8144, Japan
Tel:+81-3-5218-9720 (JBIC Institute),
Fax: +81-3-5218-9846
Osaka Branch
13th Fl., Aqua Dojima East 4-4, Dojimahama 1-Chome Kita-ku, Osaka 530-0004, Japan
Tel: +81-6-6346-4770, Fax: +81-6-6346-4779
Overseas Network
Representative Office in Jakarta
Representative Office in Beijing
3131, 31st Floor, China World Trade Center, Summitmas II 7th Floor,
No.1 Jian Guo Men Wai Avenue, Beijing Jl. Jenderal Sudirman, Kav.61-62,
100004,
Jakarta Selatan, Jakarta, Indonesia
The People's Republic of China
Tel.62-21-522-0693
Tel.86-10-6505-8989, 3825, 3826,
Fax.62-21-520-0975
3827, 3828, 1196, 1197
Fax.86-10-6505-3829, 1198
Representative Office in Kuala Lumpur
22nd Floor, UBN Tower, Letter BOX No.59,
Representative Office in Hong Kong
Jalan P.Ramlee 50250,
Kuala Lumpur, Malaysia
Suite 3111, One Pacific Place,Tel.60-3-2072-3255, 2201, 2202
88 Queensway, Hong Kong
Fax.60-3-2072-2115
Tel.852-2869-8505, 8506, 8507
Fax.852-2869-8712
Representative Office in Manila
Representative Office in Bangkok
31st F, Citibank Tower,
14th Floor, Nantawan Bldg.,
Valero St. corner Villar St.,
Makati, Metro Manila, Philippines
161 Rajdamri Road,
Tel.63-2-848-1828, 63-2-752-5682
Bangkok, 10330, Thailand
Fax.63-2-848-1833, 1834, 1835
Tel.66-2-252-5050
Fax.66-2-252-5514, 5515
Representative Office in Singapore
Representative Office in Hanoi
9 Raffles Place, #53-01 Republic Plaza,
Singapore 048619
6th Floor, 63 Ly Thai To Street,Tel.65-6557-2806
Hanoi, Viet Nam
Fax.65-6557-2807
Tel.84-4-8248934, 8248935, 8248936
Fax.84-4-8248937
Representative Office in Colombo
Level 13, Development Holdings 42,
Navam Mawatha, Colombo 2,
Sri Lanka
Tel.94-11-230-0470
Fax.94-11-230-0473

Representative Office in Dhaka
IDB Bhaban(5th floor),
E/8-A, Begum Rokeya Sharani,
Sher-E-Bangla Nagar,
Dhaka 1207, Bangladesh
Tel.880-2-811-4081, 6700
Fax.880-2-811-3336
Representative Office in Islamabad
5th Floor, Evacuee Trust Complex, Aga
Khan Road, F-5/1
Islamabad, Pakistan
Tel.92-51-2820119
Fax.92-51-2822546
Representative Office in New Delhi
3rd Floor, DLF Centre, Sansad Marg,New Delhi, 110001, India
Tel.91-11-2371-4362, 4363, 7090, 6200
Fax.91-11-2371-5066
91-11-2373-8389
Representative Office in Sydney
Suite 2501, Level 25, Gateway,
1 Macquarie Place, Sydney,
N.S.W.2000, Australia
Tel.61-2-9241-1388
Fax.61-2-9231-1053
Representative Office in Moscow
123610 Moscow,
Krasnopresnenskaya Nab.12,
World Trade Center, Office No.905,
Russian Federation
Tel.7-495-258-1832, 1835, 1836
Fax.7-495-258-1858

Representative Office in Frankfurt
Taunustor 2, 60311 Frankfurt am Main,
Germany
Tel.49-69-2385770
Fax.49-69-23857710
Representative Office in London
4th Floor, River Plate House,7- 11 Finsbury Circus, London,
EC2M 7EX, U.K.
Tel.44-20-7638-0175
Fax.44-20-7638-2401
Representative Office in Paris
21,Boulevard de la Madeleine,
75038 Paris Cedex 01, France
Tel.33-1-4703-6190
Fax.33-1-4703-3236
Representative Office in Amman
Le Royal Hotel, Zahran Street,
3rd Circle, Jabal Amman,
Amman 11118, Jordan
Tel. 962-6-468-0075, 0076
Fax. 962-6-468-0078
Representative Office in Dubai
9th Floor, West, The Gate Dubai
International Financial Centre,
P.O. Box 121300 Dubai, U.A.E.
Tel. 971-4-363-7091
Fax. 971-4-363-7090

Representative Office in Cairo
Abu El Feda Bldg., 16th Floor,
3 Abu El Feda Street, Zamalek,
Cairo, Egypt
Tel.20-2-738-3608, 3609
Fax.20-2-738-3607
Representative Office in Nairobi
6th Floor, International House,
Mama Ngina Street, P.O.Box 49526,
00100 Nairobi,Kenya
Tel.254-20-221420, 221637
Fax.254-20-221569
Representative Office in New York520 Madison Avenue, 40th Floor,
New York, NY 10022, U.S.A.
Tel.1-212-888-9500, 9501, 9502
Fax.1-212-888-9503
Representative Office in Washington,
D.C.
1909 K St. N.W., Suite 300,
Washington, D.C., 20006, U.S.A.
Tel.1-202-785-5242
Fax.1-202-785-8484
Representative Office in Buenos Aires
Av.Del Libertador No.498, Piso19, 1001
Capital Federal, Buenos Aires,
Argentina
Tel.54-11-4394-1379, 1803
Fax.54-11-4394-1763

Representative Office in Lima
Av. Canaval Moreyra No 380, San Isidro,
Lima 27, Peru
Tel.51-1-442-3031
Fax.51-1-440-9657
Representative Office in Mexico City
Paseo de la Reforma 265 Piso-16,
Col. Cuauhtemoc,
Mexico,D.F.06500, Mexico
Tel.52-55-5525-67-90
Fax.52-55-5525-34-73
Representative Office in Rio de Janeiro
Praia de Botafogo, 228- 801 B (Setor A),
Botafogo, CEP.22359-900, Rio de Janeiro,
RJ, Brazil
Tel.55-21-2553-0817
Fax.55-21-2554-8798
Toronto Liaison Office
Suite 3660, P.O. Box 493,
The Exchange Tower, 130 King Street
West,
Toronto, Ontario, M5X, 1E5, Canada
Tel.1-416-865-1700
Fax.1-416-865-0124

JBICI Research Paper Series1
1.
Issues of Sustainable Economic Growth from the Perspective of the Four East Asian Countries,
December 1999
2.
Organizational Capacity of Executing Agencies in the Developing Countries: Case Studies on
Bangladesh, Thailand and Indonesia, December 1999
3.
Urban Development and Housing Sector in Viet Nam, December 1999
4.
Urban Public Transportation in Viet Nam: Improving Regulatory Framework, December 1999*
5.
Current Situation of Rice Distribution System in Indonesia, December 19992
6.
Energy Balance Simulations to 2010 for China and Japan, March 2000
7.
Rural Enterprises Finance: A Case Study of the Bank for Agriculture and Agricultural
Cooperatives (BAAC) in Thailand, November 2000
8-1. Issues of Sustainable Development in Asian Countries: Focused on SMIs in Thailand, December
2000
8-2. Issues of Sustainable Development in Asian Countries: Focused on SMIs in Malaysia, December
2000
9.
Policy Issues and Institutional Reform in Road Sector in Developing Countries, February 20013
10. Public Expenditure Management in Developing Countries, March 2001
11. INDIA: Fiscal Reforms and Public Expenditure Management, August 2001
12. Cash Crop Distribution System in the Philippines - Issues and Measures to Address Them -,March 2002
13. MERCOSUR Experience In Regional Freight Transport Development, March 2002
14. Regional Cooperation for Infrastructure Development in Central and Eastern Europe, March
20023
15. Foreign Direct Investment and Development: Where Do We Stand?, June 2002
16-1. Development Assistance Strategies in the 21st Century (volume1), July 2002
16-2. Development Assistance Strategies in the 21st Century (volume2), July 2002
17. Education Sector in Thailand, Vietnam, Indonesia, and Malaysia, July 20023
18. Regional Cooperation Strategy on Interconnected Power Networks in Indochina, August 2002
19. Impact Assessment of Irrigation Infrastructure Development on Poverty Alleviation: A Case
Study from Sri Lanka, November 2002
20. Macroeconomic Impact of IT Adoption and Diffusion, December 2002
21. Cost Benefit Analysis of Participatory Approach －Conceptual Review and Framework for
Qualitative Analysis－, January 2003
22. Higher Education Development in Asia － Cooperation among Universities and Building
Partnership of Universities with Private Companies－, May 2003
23. Direction of Development Policy of Central American Countries, August 2003
24. Conflict and Development: Roles of JBIC－Development Assistance Strategy for Peace Building
and Reconstruction of Sri Lanka－, August 2003
25. Religions, Ethnic and Social Issues in Indonesia and its Prospects for National Reunification－,
November 2003
26. Public Finance and Debt Sustainability in Indonesia-Structure－Policy Effects and Simulation
Analysis－, December 2003
27. Restoring Economic Growth in Argentina, January 2004
28. Issues and Challenges for Water Resources in North China－Case of the Yellow River Basin－,
March 2004
29. ODA as a Foreign Policy, July 20043
30. Pro-Poor Growth through Increasing Employment Opportunities: The Case of Agro-processing
Industry in Thailand and Kenya, August 20063
31. Impact Assessment of Irrigation Infrastructure Development on Poverty Alleviation A Case
Study from Pakistan, March 2007
32. Impact of Irrigation Infrastructure Development on Dynamics of Incomes and Poverty
Econometric Evidence Using Panel Data from Sri Lanka, March 2007
33. Impact of Irrigation Infrastructure Development on Dynamics Dynamics of Incomes and Poverty
Econometric Evidence Using Panel Data from Pakistan, March 2007
Full texts can be downloaded from the JBIC website.
In Japanese only. English summary can be downloaded from the JBIC website.
3 In Japanese only
1
2

34.
35.

Report on Infrastructure financing and Bond Issuance in Malaysia, March 2007
The Structured Bond Market in Thailand, March 2007

*No.1~No.14 were published as ‘JBIC Research Paper Series’.

JBIC Institute,Japan Bank for International Cooperation
4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan
Tel: 03-5218-9720, Fax: 03-5218-9846 (Planning and Coordination Division)
HP: http://www.jbic.go.jp/

ISSN 1347-5703

4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan
Tel: 03-5218-9720（JBIC Institute）
Internet: http://www.jbic.go.jp/

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