Q: You just closed a three-year, Bt2.85 billion ($100 million) 3.55% coupon bond last week. What was the reason for raising the debt?

A: Mainly for refinancing. It’s part of our overall strategy to lower our interest costs. We are going through a process of refinancing our revolving credit facilities. We also have a $500 million bond maturing in May and we have certain bond maturities coming up next year.
 
HSBC, Thai Military Bank and Societe Generale ran the deal. We worked with Thai Military bank because of their link to ING, one of our core banks. Domestic fixed income investors and a few offshore investors dominated the investor base.
 
Q: Why did you choose to go to the debt market?
A: We like to maintain a diversified funding base. Our debt profile varies around 50-50, plus or minus 10% - bank markets and debt capital markets.
 
So it’s all about diversity and within the bank group we work with more than 100 banks. We have completed straight bonds, convertible bonds and a perpetual hybrid bond.
 
In the last couple of years, we have started questioning how we could tap new markets, and moreover, have a competitive pricing angle.
 
Q: Hence Thailand?
A: Yes. Thailand is opportunistic, I must admit. Last year we were pointed to the opportunity to potentially have the Credit Guarantee and Investment Facility (CGIF) – support an issuance in the country [the first deal of its kind in the market] .    
 
The Thai market tends to look at offshore single-A rated companies or higher. So the CGIF enhancement would allow us to rate an issue at a higher comparable rating than our international rating. So we started a conversation with CGIF to get an idea of pricing for their guarantee.
 
CGIF is rated in the international markets at AA+. With them on board, our debt was rated by Fitch at AAA on the Thai national rating scale.
 
Q: Did you swap the Thai baht back in dollars?
A: Yes. Our business is a dollar business. We have little need for Thai baht and there are times when the swap markets are favourable to us.
 
So once we were able to compute the cost of issuance, the cost of the guarantee and the swap rate, we could compare pricing to other deals available to us. It turned out to be attractive – more so than other deals we have recently considered for same tenor.
 
For similar reasons we completed three Malaysian ringgit Islamic sukuks recently – the swap levels likewise worked in our favour. The opportunity costs of issuing in other markets at similar maturity was higher.