Thai Bond Market Outlook and Trend

22 February 2018

Sakda Pongcharoenyong President TRIS Rating Co., Ltd.

Debt Securities in Thailand

0.7 1.1 1.3 1.5 1.7 1.8 2.1

2.5 2.6 3.0 3.3 3.4

3.7 4.0 4.3

0.4

0.4 0.5

0.5 0.5 0.5

0.5 0.5 0.5

0.6 0.7 0.8

0.8 0.8

0.9

0.2

0.3

0.6 0.9

1.4 1.5

1.8

2.4 2.6

3.1 2.8 2.7

2.8 3.1

3.0

0.4

0.4

0.5

0.6

0.7 0.8

1.0

1.1 1.4

1.5 1.6 1.8

2.1

2.5

2.7

-

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

THB Trillion

Foreign Bond

Commercial Paper

Corporate Bond

State Agency Bond

State Owned Enterprise Bond

Treasury Bill

Government Bond

% of total

38%

1%

8%

27%

23%

2%

1% Average cumulative annual

growth of 13.67%

Source: Thai BMA

Size of Government Bond and Corporate Bond Markets (as of Q3/2017)

239

143 153 159

83

162

44

91

101 27

140

20

103

2

0

50

100

150

200

250

300

350

Thailand Hong kong,China

Indonesia Malaysia Philippines Singapore Viet Nam

USD billion

Government bonds Corporate bonds

Total330

Total244

Total299

Total180

Total265

Total103

Total46

Source: Asian Development Bank

20.8 19.0 30.1

2.7

75.4

46.6

6.6

33.7

0.9

14.5

0

20

40

60

80

100

120

140

160

180

200

Thailand China,People's

Rep.

Hongkong,China

Indonesia Korea,Rep.of

Malaysia Philippines Singapore Viet Nam Japan

%

Corporate bonds/GDP

GDP 12,097.96

GDP 334.89

GDP 987.1

GDP 1,466.54

GDP 299.64 GDP

210.53

GDP 4,798.58

Size of Corporate Bond Market to GDP (as of Q3/2017)

Source: Asian Development Bank

GDP 435.34

GDP 301.71

GDP 303.94

54.9 49.0

42.7

15.5

53.8 52.7

27.7

53.3

20.9

197.6

0

20

40

60

80

100

120

140

160

180

200

Thailand China,People's

Rep.

Hong kong,China

Indonesia Korea,Rep.of

Malaysia Philippines Singapore Viet Nam Japan

%

Government bonds/GDP

GDP 435.34

GDP 12,097.96 GDP

334.89

GDP 987.1

GDP 1,466.54

GDP 301.71

GDP 299.64

GDP 303.94

GDP 210.53

GDP 4,798.58

Size of Government Bond Market to GDP (as of Q3/2017)

Source: Asian Development Bank

** GDP = USD billion

Size of Thailand Corporate Bond Market

Source: Thai BMA

0.38

1.10

2.67

0.09

0.29

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2003 2010 2017

THB Trillion

Short-term

Long-term

Total 2.96

Total 1.19

Total 0.38

679% growth over a span of 14 years

Distribution of Rating Categories (based on principal amount of outstanding bonds)

AAA AA A BBB Below BBB Non-reted

2003 27.3 31.8 27.4 13.5 0 0

2010 19.2 18.8 49.5 12.5 0 0

2017 8.1 28.4 38.8 19.7 1.6 3.4

27.3

31.8

27.4

13.5

19.2

18.8

49.5

12.5 8.1

28.4

38.8

19.7

1.6

3.4

0

10

20

30

40

50

60

As

a p

erc

en

tage

(%)

of

tota

l ou

tsta

nd

ing

corp

ora

te b

on

ds

Source: Thai BMA

1M 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 16Y 17Y 18Y 19Y 20Y

29-Dec-10 2.20 2.28 2.48 2.81 3.34 3.69 3.87 4.00 4.31 4.41 4.52 4.67 4.75 4.77 4.92 5.03 5.10 5.12 5.16 5.22 5.29 5.36 5.40

30-Dec-17 1.21 1.32 1.57 1.76 1.95 2.26 2.44 2.67 2.90 3.11 3.26 3.40 3.70 3.79 3.84 3.96 4.14 4.28 4.33 4.33 4.32 4.33 4.38

0

1

2

3

4

5

6

%

Thailand Average Corporate Bond Yields for “A” Rated Issues

Source: Thai BMA

Number of Outstanding Rated Issuers & Corporate Bond Issues

153 163 175 197 204 218 250

472

560 619

776

980

1,222

1,415

0

200

400

600

800

1000

1200

1400

1600

2011 2012 2013 2014 2015 2016 2017

Number of Issuers/Issues

Rated Bond Issuers

Corporate Bond Issues

Issue Size Comparison

16,000

20,636

84,900

60,000

3,647 1,688 1,630 1,523

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2003 2010 2016 2017

THB Million

Average Issue Size

Source: Thai BMA

Largest Single Issue

Thailand Corporate Bond Investors

Financial

Institutions

5%

Institutiona

l Investors

50%

Corporation

9%

Individual

31%

Others

5%

2017

Financial

Institution

s

6%

Institutional

Investors

32%

Corporation

5%

Individual

45%

Others

12%

2010

Financial

Institution

s

20%

Institutional

Investors

33%

Corporation

6%

Individual

31%

Others 10%

2003

Source: Thai BMA

Thailand Corporate Bond Lead Underwriters

13,569

14,560

16,000

17,267

22,281

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

5

4

3

2

1

THB mln

Rank 2003

SIAM COMMERCIAL BANK

STANDARD CHARTERED BANK (THAI)

KASIKORN BANK

ABN AMRO Bank N.V.

DEUTSCHE BANK AG.

17,111

21,183

26,294

33,103

59,640

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

5

4

3

2

1

THB mln

Rank 2010

KASIKORN BANK

SIAM COMMERCIAL BANK

BANK OF AYUDHYA

STANDARD CHARTERED BANK (THAI)

BANGKOK BANK

53,426

89,963

111,323

119,808

140,175

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

5

4

3

2

1

THB mln

Rank 2017

KASIKORN BANK

SIAM COMMERCIAL BANK

BANK OF AYUDHYA

KRUNG THAI BANK

BANGKOK BANK

Source: Thai BMA

Bond Market vs Loan Market

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sep-17

% Baht Billion

Corporate loans in THB Billion Corporate Bonds in THB Billion

Corporate bond growth (YOY) Corporate loan growth (YOY)

Bond market is going to overtake corporate loan market in size

Source: Thai BMA, Bank of Thailand

Estimated Corporate L-T Bond Issuances in 2018

263,969 254,203

540,329

444,308

568,886 572,424

772,300 800,661

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

THB Million

+3–5%

Bond Issuances 2015-2017 by Sectors

193,723

91,508

99,550

138,025

142,952

172,620

185,500

208,054

235,649

245,785

301,069

Others

Consumer Finance

Transportation

Leasing

Energy

Agri/Food

Telecom

Construction Material

Property

Retail

Banking

- 50,000 100,000 150,000 200,000 250,000 300,000 350,000

THB Million

Source: Thai BMA, TRIS Rating