The tiny S.E. Asian country of Laos is struggling to try to meet its debt obligations amid sovereign downgrades and depleted foreign reserves.

 

 

National debt has risen to the equivalent of two-thirds of Laos' $18 billion GDP—around half of which is owed to China, which has invested in almost 800 separate projects in Laos and is its largest foreign creditor.

 

Recently Laos redeemed a US$150 million bond listed on the Singapore Exchange, reducing away only part of its ballooning external debt, which is owed over the next five years.

 

The $150 million bond, sold on the international market with a 6.875% interest rate, was the first of three sovereign bonds falling due this year.

 

Two Thai baht denominated bonds worth 5 billion baht ($156 million) will also fall due in October and November.

 

Down Graded Credit Rating

 

Moody’s and Fitch credit rating agencies both downgraded Laos’ sovereign ratings last year in response to the nominally communist country’s escalating public debt, declining foreign exchange reserves and concerns about potential defaults on debts coming due.  

 

“If you look at their credit history they have never defaulted,” said Adisorn Singhasacha, CEO of Twin Pine Group, a Bangkok-based financial advisory company.

 

Twin Pine has arranged seven sovereign bonds for Laos and corporate bonds for national power producer EDL-Gen since introducing the neighboring country to Thailand’s capital market in 2013.

 

Twin Pine’s pioneering of the Lao bond market was made possible by Thailand’s relaxation on sovereign bonds issues in 2012, when it scrapped a requirement that foreign issuers must have an investment-grade sovereign credit rating to be sold on the Thai capital market.

 

The requirement was blocking Thailand’s ambitions to become a financial hub for the so-called CLMV (Cambodia, Laos, Myanmar, Vietnam) region, none of which have investment-grade ratings according to international credit rating agencies such as Fitch, Moody’s and Standard & Poor’s.     

 

Indeed, Laos had no international credit rating at all in 2013, when it first started issuing bonds on the Thai market, but that did not stop Thai investors from buying in at a 4.5% interest rate.

 

TRIS Ratings, a Thailand-based credit rating agency, started issuing credit ratings for Thai denominated Lao bonds in 2015, making it easier for insurance companies to also invest in Lao bonds.

 

Between 2013 to 2018, the Lao Finance Ministry issued about US$1.6 billion worth of both Thai baht and US dollar sovereign bonds on the Thai market, selling primarily to institutional and high-net-worth auctions managed by Twin Pine.

 

Besides Twin Pine, New York-based Oppenheimer Holdings is the only other large player in the Lao bond market, though with only one issuance to date.

 

Thai investors used to have good reason to be confident in Laos redeeming its bonds.

 

 

The next Chinese province?

That’s OK.  China will continue to suck up Mekong.

Didn't the Chinese publicly admit a few years ago they wante to resettle Laos with a few million Chinese?

the environmental damage resulting from the Laos dependance on Chinese investment is quite appalling. The government don't really seem to have a good appreciation of the bigger picture and are selling their country up the Mekong.

 

First one to fall...

 

Next in line...?

Many years ago, I used to think that Thailand had sold its soul to Japan, with all their investments. I wonder who pays for it all now. 

Unfortunate Laos. So far from Heaven; so close to China.

Luang Prabang Soon to be renamed:  Xieng Thong.  

 

Probably too far gone now to be saved from becoming a Chinese province.

 

They are getting what they were looking for.....

The Laotian ladies are popular with Chinese men seeking marriage - white skin and available.

27 minutes ago, bangon04 said:

The Laotian ladies are popular with Chinese men seeking marriage - white skin and available.

Rubbish

On 7/9/2021 at 5:54 AM, ASEAN NOW News said:

National debt has risen to the equivalent of two-thirds of Laos' $18 billion GDP—around half of which is owed to China, which has invested in almost 800 separate projects in Laos and is its largest foreign creditor.

Which is how China stealthily takes over your country.

It builds mega projects for you, roads, bridges, railways, ports, hotels etc etc, then when pay-back time comes and you can't repay they move-in and take over.

PNG is in the same boat, China built many projects for them, the stupid leaders thought it was good for the countries future... I hope they like the colour Red.

On 7/9/2021 at 5:54 AM, ASEAN NOW News said:

 

“If you look at their credit history they have never defaulted,”

How many kip to the US dollar? 

7 hours ago, Venom said:

How many kip to the US dollar? 

About 9,400 right now, slowly up from about 9,000 kip.  My modest USD income buys me more kip to put in my 8% pa interest savings account ????

 

PS - Laos effectively became a province of China years ago...

Don't overlook Vietnam, long term ally of Laos. Laos has for decades been in the pocket of Vietnam....they are vey upset by the new Chinese influence. In March 2021 Vietnam announced it had gifted a new parliament building worth US$111 million to Laos. there is a tug of war going and at present China might be winning. China's influence is however, not unique to Laos and it is unlikely become a province. Chinese policies are not in general territorially expansive. They do however seek influence through economics. The west could do this just as easily but it took a war to get them out last time.

Westen China is relatively undeveloped and there is a serious geographical problem with Chinese expert capabilities - everything they make or sell has to East for export and then wend it's way westward. China therefore wants routes to the West - road rail and sea. The nearest accesstoth sea are the deep ports ofMyanamar and even Thailand - so they will subsidise any route through any country that helps that. Having driven extensively in Laos, it is easy to tell when you are on achieve road - they start in one piece.

There are of course natural resources that China wants to access in ads - the river Mekong and those wretched banana plantations - they also use it as a hub for importing illegal wildlife.

It is unfortunate that the leaders in Laos are basically not merits other jobs - they come by them undemocratically through corruption and nepotism. The result is that they are not able to perform the jobs they have - they are don't have the caliber - so it is vey easy for the Chinese to get very one-sided deals that advantage only China. 

 

Te solution is really not to push against China, but for the West - ad counts like Vietnam too - to up their influence and start getting involved in the Laos economy.

Laos is a country with quite good natural resources and there is potential for growth there tat is not pinned to China.

Edited July 10, 20214 yr by Thunglom

22 hours ago, Thunglom said:

Don't overlook Vietnam, long term ally of Laos. Laos has for decades been in the pocket of Vietnam....they are vey upset by the new Chinese influence. In March 2021 Vietnam announced it had gifted a new parliament building worth US$111 million to Laos. there is a tug of war going and at present China might be winning. China's influence is however, not unique to Laos and it is unlikely become a province. Chinese policies are not in general territorially expansive. They do however seek influence through economics. The west could do this just as easily but it took a war to get them out last time.

Westen China is relatively undeveloped and there is a serious geographical problem with Chinese expert capabilities - everything they make or sell has to East for export and then wend it's way westward. China therefore wants routes to the West - road rail and sea. The nearest accesstoth sea are the deep ports ofMyanamar and even Thailand - so they will subsidise any route through any country that helps that. Having driven extensively in Laos, it is easy to tell when you are on achieve road - they start in one piece.

There are of course natural resources that China wants to access in ads - the river Mekong and those wretched banana plantations - they also use it as a hub for importing illegal wildlife.

It is unfortunate that the leaders in Laos are basically not merits other jobs - they come by them undemocratically through corruption and nepotism. The result is that they are not able to perform the jobs they have - they are don't have the caliber - so it is vey easy for the Chinese to get very one-sided deals that advantage only China. 

 

Te solution is really not to push against China, but for the West - ad counts like Vietnam too - to up their influence and start getting involved in the Laos economy.

Laos is a country with quite good natural resources and there is potential for growth there tat is not pinned to China.

From living here and chatting with locals, I often hear resentment against the Chinese, but not against the Vietnamese.  There are both communities here in Luang Prabang, and both have funded schools. Many Chinese and Vietnamese businesses as well.  

47 minutes ago, simon43 said:

From living here and chatting with locals, I often hear resentment against the Chinese, but not against the Vietnamese.  There are both communities here in Luang Prabang, and both have funded schools. Many Chinese and Vietnamese businesses as well.  

Vietnamese are long time allies of Laos. they fought together against the Americans in the 60s/70s. When the French fled the Vietnamese stayed behind (and kept the coffee and bakeries going!) and the V/N government supported Laos ever since. Obviously they are interested in an "indoor-chinese" alliance - Laos, Vietnam and Cambodia. Together they could be strong enough to fend off the negative influences of both China nd the West (incThailand). Unfortunately Cambodia is being drawn over by China too.

Laos still has a lot to gain by keeping close ties with Vietnam - anyone who has visited south Laos will notice the enormous amount of trade that continues between the 2 countries - almost without hindrance. (all those enormous American semis you see on the roads there are Vietnamese). Vietnam is Laos most direct access to the sea. So whilst China's tendrils spread across S.E. Asia, Laos and Vietnam can still do there own thing. Let's hope it works and some of the environmental damage caused by the Chinese may be avoided.

As I've said before; "be careful who you get into bed with", Sihanoukville, Cambodia comes to mind.

On 7/9/2021 at 10:07 PM, Scott Tracy said:

First one to fall...

 

Next in line...?

Cambodia and then Thailand....