Thai Finance Ministry issues bonds to restructure rice mortgage scheme debts

[webfact]

Finance Ministry issues bonds to restructure rice mortgage scheme debts

BANGKOK, 26 November 2014 (NNT) – The Finance Ministry has issued bonds worth 50 billion baht, the biggest-ever bond issuance in history, in its latest move to restructure the debts incurred from the rice-mortgage scheme from the previous administration.

The bonds, which are issued by Bank of Agriculture and Agricultural Cooperatives (BAAC), are divided into two categories. The first category, which is worth 42 billion baht offers an interest rate of 2.75 percent per year. The latter, which is worth eight billion baht, offers an interest rate of 3 percent per year.

The Finance Ministry will underwrite both the capital and the interest. The government will undertake the responsibility to repay the debts along with the interest. According to the Finance Ministry, non-bank operators, particularly securities companies managing mutual funds have expressed interest in the bond investment.

Aside from BAAC, the bonds are available in Krung Thai Bank, CIMB Thai Bank, Standard Chartered Thailand, and the Hong Kong and Shanghai Banking Corporation Limited (HSBC) in Bangkok.


-- NNT 2014-11-26

[terryp]

The government will undertake the responsibility to repay the debts along with the interest.

interesting it does not say the duration (or are they year bonds ) looking forward to a huge devaluation of the baht as will be needed if the government of the time has any chance to re-pay the bonds of this huge amount..going to be very interesting over the next few years here

[ramrod711]

The Finance Ministry has issued bonds worth 50 billion baht, the biggest-ever bond issuance in history, in its latest move to restructure the debts incurred from the rice-mortgage scheme from the previous administration.

Don't financial advisors recommend that you only restructure debt if you absolutely can not meet your obligations? Once again, thanks to the "previous administration".

[Thai at Heart]

The Finance Ministry has issued bonds worth 50 billion baht, the biggest-ever bond issuance in history, in its latest move to restructure the debts incurred from the rice-mortgage scheme from the previous administration.

Don't financial advisors recommend that you only restructure debt if you absolutely can not meet your obligations? Once again, thanks to the "previous administration".

Not from a government perspective. The UK has borrowed over 100 years on some bonds. Govts want as as long a term as possible. If the Thais can spread this over 25 years or even 10 years , well done. Not ideal but well done.

[surangw]

toilet paper is still better, worthless bonds are rough on the arse

[rickirs]

It will be up to the securities market to decide if 2.75% and 3% are worth the risk. These rates seem low considering current economic slowdown and potential for inflation. Also, a moderate (ie., 10-years) term offering might add further risk due to the propensity of military coups and political conflict that could again harm the economy. Compared to current 24-month fixed deposit rates at some Thai banks and assuming the rice bonds term is 5 years, suggests a rate higher than 3% for the rice bonds.

[rickirs]

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The Finance Ministry has issued bonds worth 50 billion baht, the biggest-ever bond issuance in history, in its latest move to restructure the debts incurred from the rice-mortgage scheme from the previous administration.

Don't financial advisors recommend that you only restructure debt if you absolutely can not meet your obligations? Once again, thanks to the "previous administration".

"thanks to the "previous administration" ??

Where do you think the Junta is getting the funds to finance its economic stimulus for 2014 & 2015? Even without the rice pledge program the new Government is already in deficit spending due to the cost of the coup, government shutdown and "reorganization," faltering tax collections, negative to low GDP growth, Junta's new subsidies and soft loans, etc. Fortunately, the previous administration had a large cash reserve that the Junta spent almost immediately. Looking at 161 countries for 2013, every one had debt, including Saudi Arabia and the UAE. Obviously, government budgets operate differently than personal budgets.

[Ricardo]

Rolling-over the rice-debts, rather than repaying them and saving the interest-payments, suggests that the Thai government remain unable/unwilling to 'bite the bullet' on this failed-scheme.

It's over, it's failed, face that fact and put it out of its misery, and let the blame lay where it belongs !

[siampolee]

The government will undertake the responsibility to repay the debts along with the interest.

Sorry .

The taxpayers will be assuming the responsibility for the debts via direct and indirect taxation.

Those that actually benefited from the maze of financing movements will of course be exempted from repaying their ill gotten gains thus they will be in fact are laughing all the way to their Swiss banks or wherever.

[mikemac]

toilet paper is still better, worthless bonds are rough on the arse

Hopefully this bond issue will work, and they do not end up nailed to the back of your dunny door.

Seems like repairing the damage caused by previous government is going to take longer then the junta thought. I suppose the PTP hope it will be fixed before the next elections.

[Nuddy]

The sale of the bonds will take cash out of the financial system and thats really opposite to what a stalled economy requires.