Docstoc

SP2

Document Sample
SP2 Powered By Docstoc
					Strategies for Prospering Thai Primary &
    Secondary Government Bond Market
                        November 20, 2009



                          Dr. Santi Kiranand
                                 Group Head
                        Market Development
              The Stock Exchange of Thailand
                            santiki@set.or.th
                                            1
Analysis
 Supply side: financing needed by
  government
 Demand side: the readiness of the
  market and the need in government
  securities.




                                      2
 Stimulus package: to help recover the economy
 SP1
 Jan,13 2009 Cabinet agreed to a THB1.683 trillion stimulus package to
  counter the economic slowdown.
 The government started spending a THB116.7 billion in March 2009, called
  “Stimulus Package1 (SP1)”.
 IMF estimated the world economic will be contracted by 0.5% - 1.0% and
  late recovered.
 A cabinet statement said that the stimulus package is to lure back tourists
  and develop holiday and destinations.

          The exchange rate: US$ 1 ~ THB 33.3 ~ NT$ 32.35

                                                                            3
Stimulus package: to help recover the economy
SP2
 After SP1, cabinet approved the Stimulus Package 2 over the next three
  fiscal years (2010-2012).
 The plan comprised a mix of cash handouts for low earners, tax cuts,
  expanded free education and subsidies for transport and utilities.
 SP2 is amount THB1.56 trillion.
 The government expected this 2nd package to help boost GDP by 5% and
  create 1.6 million jobs over three years.




                                                                           4
 SP2
                                     Water Resource
                                      /Agriculture
                                      THB0.23 trn.

                                                                 Public Service
       Community                                                  THB1.14 trn.
       THB 0.1 trn.




                             THB1.56 trillion
  Public Health                                                               Tourism
  THB 9.29 bn.                                                               THB6.64 bn.




                                                       Innovative
                       Education
                                                        Economy
                      THB60.15 bn.
                                                      THB20.13 bn.


                                                                                     5
Source: www.tkk2555.com
SP2
 Of THB1.566 trillion, THB676 billion (43%) is allocated for logistic projects
  such as mass transit, roads, aviation and railways. Irrigation investment
  takes nearly 15% of the budget with nearly 35,000 projects. It claims to
  create 350,000 jobs over three years.
 Energy investment gets THB213 billion. It is worth noting that the budget
  allocated to the Southern area is relatively high at Bt100bn. Southern GDP
  accounts for 9-10% of the country.
 Of the THB100 billion, THB65 billion will go to five provinces in the deep
  South.



                                                                              6
SP2




      7
SP2




      8
Source of Funds
 Source of funds of SP2 will come from the budget (39.2%),
  domestic borrowing (17%), foreign borrowing (27.1%) and other
  income (16.6%).
 The package will result in an increase in government borrowing
  of THB 692 billion or about 7.6% of 2008 GDP. This might cause
  public debt to exceed 50% of GDP.




                                                               9
 1. Financing for Fiscal deficit & Debt restructuring
                              Issue   Fiscal Year 08   Fiscal Year 09       Expected Fiscal
             Bond             Term                                             Year 10
                                        (Mil. THB)       (Mil. THB)
                             (Year)                                           (Mil. THB)
1.1 Benchmark Bond             5              72,000           74,380              140,000
                              10              53,000           65,000                70,000
                              15              24,050           26,650                40,000
                              20              23,950           38,000                40,000
                              30               5,000            5,500                20,000
1.2 Non-Benchmark Bond         7              10,000                    -            15,000
                              12               8,000           16,000                15,000
                              14              15,000                    -                 -
1.3 Saving Bond              5–10              6,000           80,000              100,000
1.4 P/N                       >5              30,950           83,598                51,171
2.1 S-T Government Bond        2                   -           88,000                     -
                               3                   -           49,999                     -
2.2 T-Bill                                         -          134,000                     -
3.1 Floating Rate Bond         4                   -           22,000                30,000
3.2 Inflation Linked Bond      ?                   -                    -            10,000
             Total                          260,681          683,127                  10
                                                                                   531,171
Source: www.pdmo.mof.go.th
2. Financing for Special Package 1 & 2
                                      Fiscal Year 09       1 Oct 2009 – 31 Dec
                              Issue                               2009
Bond                          Term        SP1
                             (Year)    (Mil. THB)                 SP2
                                                               (Mil. THB)
2.2 Bank Loan                 1-10              30,000                  100,000

3.1 P/N                       5+                       -                100,000

3.2 Saving Bond               5+                       -                    70,000
                Total                          30,000                  270,000

Source: www.pdmo.mof.go.th




                                                                            11
Issuance Value of Domestic Bond

              Bil.THB
           1400

           1200

           1000

           800
 Bil.THB




           600

           400

           200

             0
                  2001   2002   2003         2004     2005     2006       2007    2008   2009 as of
                                                                                            Q3

                                       Government Debt Securities     Corporate Bond
                                                                                                      12
  Thailand Outstanding Value

          5,000,000.00
          4,500,000.00
          4,000,000.00
          3,500,000.00
          3,000,000.00
Mil.THB




          2,500,000.00
          2,000,000.00
          1,500,000.00
          1,000,000.00
           500,000.00
                 0.00
                         2001   2002    2003     2004     2005     2006     2007    2008   2009 (1-10)

                                   Government Debt Securities    Corporate Bond    Foreign Bond
                                                                                                         13
Thailand Outstanding Value
                                       Ex. Gov. Securities
     1,200,000.00
     1,000,000.00
          800,000.00
Mil.THB




          600,000.00
          400,000.00
          200,000.00
                0.00
                       2001   2002   2003     2004     2005     2006     2007   2008   2009 (1-
                                                                                         10)

                                            Corporate Bond    Foreign Bond

                                                                                           14
        Thailand Trading Value
      100,000,000.00 Mil.THB
             10,000,000.00
                    1,000,000.00
                     100,000.00
Logarithmic scale




                      10,000.00
                        1,000.00
                         100.00
                          10.00
                            1.00
                                   2001   2002     2003     2004         2005    2006        2007     2008     2009 (1-10)
                                            Government Debt Securities      Corporate Bond      Foreign Bond

                                                                                                                    15
Bond Turnover Ratio
  5
4.5
  4
3.5
  3
2.5
  2
1.5
  1
0.5
  0
      2001   2002   2003       2004       2005     2006     2007      2008   2009 (1-10)

                      Government Debt Securities     Corporate Bond

                                                                                       16
  Yield Curve Movement
                      From 01/01/2009 to 18/11/2009




                                                            SP2 Borrowing
                                                                 Plan
                                             SP2 Schedule
             SP1 Schedule                   Announcement
            Announcement    SP1 Borrowing
                                 Plan




                                                                            17
Source: ThaiBMA
  Average AAA-Credit Spread

         Bps.
         180
         170
         160
         150
         140
         130
         120
         110
         100
          90
          80
          70
          60
          50
          40
          30
          20
          10
           0
                  Q3 2009      Q2 2009              Q1 2009   Q4 2008

                               <= 3 Yrs   3-5 Yrs    > 5Yrs
                                                                        18
Source: ThaiBMA       Note: Data as of last date at each Quarter
  Term Spread

                                                    Term Spread 10-1 year
  3.5
    3
  2.5
                                                                                                                                                   SP2 Borrowing
    2                                                                                                                                                   Plan
  1.5                                                                    SP1 Borrowing                           SP2 Schedule
                                                                              Plan                              Announcement
    1
  0.5                                                      SP1 Schedule
                                                          Announcement
    0
        18/11/2008


                     18/12/2008


                                  18/1/2009


                                              18/2/2009

                                                             18/3/2009


                                                                            18/4/2009


                                                                                        18/5/2009


                                                                                                    18/6/2009


                                                                                                                    18/7/2009


                                                                                                                                18/8/2009


                                                                                                                                            18/9/2009


                                                                                                                                                        18/10/2009
                                                                                                                                                                     19
Source: ThaiBMA
What has happened?
 Change in the yield curve shape
  (from hump in shorter than 1-year to
  normal shape)
 Steepened yield curve has been
  observed since the first
  announcement of the SP1. After that,
  the curve was upward parallel shifted.


                                      20
What will be in the future?
 It is expected to observe the increase
  in policy rate by Q2/2010.
 The liquidity of secondary market
  might not speed up rapidly like it was
  in 2007 and 2008.
   More supply      ---> positive effect
   Increasing yield ---> negative effect



                                            21
What will be in the future?
 Benchmark, yield curve will be better
  estimated. Private sector will benefit
  from the clearer benchmarks.
 There will be more risk-management
  instrument in the market. TFEX is
  going to launch interest rate futures
  by 2010.


                                          22
What should be prepared?
 The supporting functions in bond
  market must be improved, i.e. the
  CRA, credit enhancement mechanism.
 Tactfully add more players in the
  bond market. Government securities
  might be more used as vehicle in
  liquidity management for private
  sector.

                                   23
What should be prepared?
 If less interest rate volatility is
  observed, it is expected to see more
  issuance of long term government
  securities.
 The market will be deeper. ILB, FRB
  will be issued more.
 Retail investor may be able to access
  bond market easier.

                                      24
Thank you
            www.set.or.th




                            25

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:61
posted:7/3/2012
language:English
pages:25