Why Are You Even Here? The Surprising Attitudes of Some Expats in Thailand

[how241]

Can you cash-out or withdraw your money before the 10 years? Here is a link to the promotion page at the bank. Can anyone expalin how this is different and why the interest rate is so high. http://www.krungsri....s=&cid=&did=636#

Thanks

[mania]

why the interest rate is so high

My understanding

risk-reward

Unsecured loan - no insurance

Should the issuer be liquidated all others would be paid first

[how241]

why the interest rate is so high

My understanding

risk-reward

Unsecured loan - no insurance

Should the issuer be liquidated all others would be paid first

Yes, not Gov't insured but they claim a A+ rating, for whatever that's worth.

[mania]

Yes, not Gov't insured but they claim a A+ rating, for whatever that's worth.

Yes & it could be different here but,

I think all the toxic debt in the US was also highly rated, initially

I guess you just have to decide if 4.7% is reward enough for the risk.

edit: have you read the prospectus? I see it was expected to be available Oct 18th

Edited October 23, 2012 by mania

[how241]

Yes, not Gov't insured but they claim a A+ rating, for whatever that's worth.

Yes & it could be different here but,

I think all the toxic debt in the US was also highly rated, initially

I guess you just have to decide if 4.7% is reward enough for the risk.

Agreed. Those rating agencys have turned out to be a joke.

[mania]

Agreed. Those rating agencys have turned out to be a joke.

I edited my post probably after you read it but,

I was wondering if you had read the prospectus or if it was available.

[how241]

Agreed. Those rating agencys have turned out to be a joke.

I edited my post probably after you read it but,

I was wondering if you had read the prospectus or if it was available.

I have not read it. In the fine print, they reccomend that you read it.

[Naam]

nobody in his right mind would put money in a fixed deposit with a 10-year maturity!

[falang07]

...unless it has a double digit interest rate

[chiang mai]

It's a Bill of Exchange, not a fixed term deposit, not guaranteed in any way.

[jbrain]

...unless it has a double digit interest rate

But this one has..............04.70%

[fletchsmile]

I'd rather take 3%+ on a much shorter time frame, than 4.7% on a 10 year single Thai name debenture.

Some of the risks to bear in mind:

- This is a debenture not a fixed deposit, so not covered by the normal deposit insurance scheme that a bank deposit would be

- A Fitch (Tha) rating if that is what it is (although it's not clear); is not the same as the normal global Fitch Rating. As an example, Standard Chartered (Thailand) has a AAA Fitch (Tha) rating. Globally Stan Chart is AA- for the global bank not just Thai entity. Obviously AA- globally for Stan Chart is better than AAA (tha) Stan Chart (Thailand)

- The debenture says it has a call option. That means that if the bank thinks it can raise funding cheaper it can force a redemption of the debenture on you. I haven't bothered reading the prospectus as it doesn't interest me and I don't find it appealing. If they call the debenture it will probably be in a few years time. So broadly if rates go up they'll leave it as is, and if you continue to hold you could be missing out on better rates in the market a few years from now. On the other hand, if rates go down they'll call it back and you'll no longer get 4.7%, but be left looking around for a good rate in the market again, bearing in mind rates are likely to be worse than when you started. So Krungsri benefit from any rates movements at your expense.

- 10 years is a long time, and a lot can happen in terms of credit risk.

Edited October 23, 2012 by fletchsmile

[yoshiwara]

nobody in his right mind would put money in a fixed deposit with a 10-year maturity!

that might depend on whether there was a liquid market for selling such assets ahead of maturity.

[chiang mai]

It's a Bill of Exchange, not a fixed term deposit, not guaranteed in any way.

Sorry, I'm bad, I commented without even opening the attachment and thought it was the same product that was being discussed elsewhere, it is in fact subordinated debt and not a BoE.

[SantiSuk]

Looks an interesting product, reasonably-priced, in todays market for inclusion in a structured portfolio of different risk/different maturity assets. Certainly not for the average saver.

I don't see that being cashed-out early is necessarily a bad thing, unless you were fixated by needing to invest for 10 years. You will have benefitted in the early years from interest rates. well above market.

If you want safe then 10 year US Treasuries are yielding around 2% aren't they? (Haven't looked specifically)

[Naam]

nobody in his right mind would put money in a fixed deposit with a 10-year maturity!

that might depend on whether there was a liquid market for selling such assets ahead of maturity.

the only liquid assets in Thailand are Nam Pla, Singha, Chang and Leo

[Naam]

Looks an interesting product, reasonably-priced, in todays market for inclusion in a structured portfolio of different risk/different maturity assets. Certainly not for the average saver.

I don't see that being cashed-out early is necessarily a bad thing, unless you were fixated by needing to invest for 10 years. You will have benefitted in the early years from interest rates. well above market.

If you want safe then 10 year US Treasuries are yielding around 2% aren't they? (Haven't looked specifically)

10Y $ UST 1.78%

10Y € Bunds 1.57%

10Y £ Gilts 1.82%

10Y Roo-$ Down Under 3.20%

[mania]

If you want safe then 10 year US Treasuries are yielding around 2% aren't they? (Haven't looked specifically)

I am not sure I would compare anything to western rates any more or even consider them.

Personally I would not lock up for 10 years @ 4.7

Like Fletch I rather take the 3% (2.9 in my case ) for now on cash holdings and wait & see.

[Naam]

Personally I would not lock up for 10 years @ 4.7

for Americans and Brits it would have paid the last 10 years.

[how241]

I'd rather take 3%+ on a much shorter time frame, than 4.7% on a 10 year single Thai name debenture.

Some of the risks to bear in mind:

- This is a debenture not a fixed deposit, so not covered by the normal deposit insurance scheme that a bank deposit would be

- A Fitch (Tha) rating if that is what it is (although it's not clear); is not the same as the normal global Fitch Rating. As an example, Standard Chartered (Thailand) has a AAA Fitch (Tha) rating. Globally Stan Chart is AA- for the global bank not just Thai entity. Obviously AA- globally for Stan Chart is better than AAA (tha) Stan Chart (Thailand)

- The debenture says it has a call option. That means that if the bank thinks it can raise funding cheaper it can force a redemption of the debenture on you. I haven't bothered reading the prospectus as it doesn't interest me and I don't find it appealing. If they call the debenture it will probably be in a few years time. So broadly if rates go up they'll leave it as is, and if you continue to hold you could be missing out on better rates in the market a few years from now. On the other hand, if rates go down they'll call it back and you'll no longer get 4.7%, but be left looking around for a good rate in the market again, bearing in mind rates are likely to be worse than when you started. So Krungsri benefit from any rates movements at your expense.

- 10 years is a long time, and a lot can happen in terms of credit risk.

Thanks. Lots of good info. I agree, that I would be afraid to lock up for 10 years. Way too long in these times. I like the 4.70% rate but ONLY if I would have the option of cashing out when I want or need to. That is the part I don't understand. Am I 100% 'Locked" in for the 10 years ??

[topt]

Personally I would not lock up for 10 years @ 4.7

for Americans and Brits it would have paid the last 10 years.

Not sure on that Naam as 5/6 years ago I was getting 6% plus for 12 month fixed and from memory 4.5% for 5 years fixed was available until a few years ago (time flies so maybe was 4 years ago?) - I thought inflation was going to happen so did not participate

[yoshiwara]

I'd rather take 3%+ on a much shorter time frame, than 4.7% on a 10 year single Thai name debenture.

Some of the risks to bear in mind:

- This is a debenture not a fixed deposit, so not covered by the normal deposit insurance scheme that a bank deposit would be

- A Fitch (Tha) rating if that is what it is (although it's not clear); is not the same as the normal global Fitch Rating. As an example, Standard Chartered (Thailand) has a AAA Fitch (Tha) rating. Globally Stan Chart is AA- for the global bank not just Thai entity. Obviously AA- globally for Stan Chart is better than AAA (tha) Stan Chart (Thailand)

- The debenture says it has a call option. That means that if the bank thinks it can raise funding cheaper it can force a redemption of the debenture on you. I haven't bothered reading the prospectus as it doesn't interest me and I don't find it appealing. If they call the debenture it will probably be in a few years time. So broadly if rates go up they'll leave it as is, and if you continue to hold you could be missing out on better rates in the market a few years from now. On the other hand, if rates go down they'll call it back and you'll no longer get 4.7%, but be left looking around for a good rate in the market again, bearing in mind rates are likely to be worse than when you started. So Krungsri benefit from any rates movements at your expense.

- 10 years is a long time, and a lot can happen in terms of credit risk.

Thanks. Lots of good info. I agree, that I would be afraid to lock up for 10 years. Way too long in these times. I like the 4.70% rate but ONLY if I would have the option of cashing out when I want or need to. That is the part I don't understand. Am I 100% 'Locked" in for the 10 years ??

If, as Naam has suggested, there is no market trading in these assets, then the question is what, if any, is the discounted surrender value with the bank.

[Naam]

Personally I would not lock up for 10 years @ 4.7

for Americans and Brits it would have paid the last 10 years.

Not sure on that Naam as 5/6 years ago I was getting 6% plus for 12 month fixed and from memory 4.5% for 5 years fixed was available until a few years ago (time flies so maybe was 4 years ago?) - I thought inflation was going to happen so did not participate

what i meant is that the Baht's appreciation vs. $ and £ would have made even a low yield of 4.70% for Americans and Brits quite attractive.

[topt]

Personally I would not lock up for 10 years @ 4.7

for Americans and Brits it would have paid the last 10 years.

Not sure on that Naam as 5/6 years ago I was getting 6% plus for 12 month fixed and from memory 4.5% for 5 years fixed was available until a few years ago (time flies so maybe was 4 years ago?) - I thought inflation was going to happen so did not participate

what i meant is that the Baht's appreciation vs. $ and £ would have made even a low yield of 4.70% for Americans and Brits quite attractive.

Sorry my misunderstanding and yes unfortunately

[exeter]

nobody in his right mind would put money in a fixed deposit with a 10-year maturity!

According to the paperwork you can cash it in after 5 years or on the anniversaires from 5 to 10 years. Whether the interest rate drop has affected this figure reamains to be seen. The paperwork given to me shows a spread of investments and the % as usual the wife has hidden/tidied the paperwork but as I recall it was Thai govt debt, car purchasing, some in Dubai, the rest escapes me, it opens on the 29th Oct I think, get the English paperwork and see how it looks for 5 years. Depends on your risk levels and age I think.