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March 19, 2009

Thai companies plan more bonds ahead of govt launch
Thai companies are likely to sell about 240-250 billion baht ($6.7-7.0 billion) of bonds this year, more than expected and mostly ahead of huge supply from the government, Reuters quoted the Thai Bond Market Association as saying Wednesday.

"I see new supply from firms. They are rushing to tap demand before the government launches new bond issues in the second half to fund its economic stimulus measures," the association's president, Nattapol Chavalitcheevin, told reporters.

The government has yet to say how much new debt it will issue, but it has earmarked a budget deficit of 390 billon baht for fiscal 2009/2010 from October to boost the economy.

About 80 billion baht of corporate bonds have been sold so far this year as firms wanted long-term funds to cope with the impact of the global financial crisis, Nattapol said.

The association's new full-year estimate of bonds to be issued compares with its previous forecast of 160-180 billion baht, but is still below the 280 billion baht issued in 2008.

Among firms planning bond issues in coming months are PTT Exploration and Production, which plans to sell up to 30 billion baht in the domestic market to ensure liquidity and help secure long-term gas supplies.

Market players are anticipating further policy rate cuts to support the economy and that has pushed government bond yields down sharply at the short end since January.

The Bank of Thailand has said there is still room to cut interest rates after three big cuts since December to help the economy, which looks like shrinking this year. The policy rate is now at 1.50 percent. It next reviews rates on April 8.

Government bond yields were largely lower in the secondary market on Wednesday, especially at the long end, boosted by buying by insurance firms to match their commitments. The bond market was also encouraged by the good response to the latest government bond auction.

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