Thailand to issue 20 billion THB in sustainable bond sales

Thailand’s Public Debt Management Office (PDMO) is set to issue 20 billion THB ($540 million) in sustainable bonds to institutional investors this year.

According to public debt advisor for PDMO Jindarat Viriyataveekul, these bonds are designed for businesses adhering to environmental, social, and governance (ESG) principles.

Sustainable bonds are a subset of ESG bonds, and the PDMO currently has 467 billion THB in outstanding ESG bonds, accounting for 5.6% of its total bond portfolio.

Jindarat confirmed that the PDMO aims to issue ESG bonds annually to establish a benchmark for this type of financial instrument.

In terms of international bond issuance, it is evaluating the advantages and disadvantages to present a proposal to the finance minister.

Foreign investors have shown interest in Thai government bonds, and Jindarat highlighted that issuing bonds abroad could set a benchmark for Thai companies looking to issue international bonds in the future.

Jindarat explained that the tactic of raising funds through issuing foreign currency bonds accommodates financial market volatility in cases where the domestic bond and financial markets are tight.

However, the primary factor for the PDMO to consider is the cost of issuing foreign currency bonds, which is currently higher than issuing bonds domestically, she noted.

She acknowledged that the bonds can have several benefits, including providing the Thai government access to a wider range of funding sources and mitigating the risk of crowding out private sector capital. Additionally, it can serve as a reference cost for the Thai private sector to issue such bonds.

She added that another benefit would be providing a reference cost for the Thai private sector to issue such bonds.

The Thai Bond Market Association classifies ESG bonds into four categories: green bonds, social bonds, sustainability bonds, and sustainability-linked bonds.