The Finance Ministry will let foreign state agencies and companies apply for baht-denominated bond issuance as a special case from Sept 6 to Oct 6, a move expected to help curb the baht's rapid gain.
Foreign entities that win Finance Ministry approval must issue the baht bonds with a maturity of up to three years between Nov 1, 2017 and March 31, 2018, the Public Debt Management Office (PDMO) said in a release.
The issuers will be allowed to use the proceeds only in domestic transactions in baht terms and for onshore spot exchange.
The ministry will open applications for foreign entities to offer baht-denominated bonds three times a year: in March, July and November.
An informed source at the Finance Ministry said the special period for baht bond applications is in line with the initiatives of Finance Minister Apisak Tantivorawong, since he believes that letting foreign entities issue baht bonds will help stem the sharp appreciation of the baht, as bond issuers must convert proceeds to US dollars.
But the issuance size depends on the Finance Ministry's discretion, the source said.
The baht is among the top-performing currencies in Asia, up 7.7% year-to-date, according to Bloomberg data. In comparison, the Japanese yen has surged 7.9%, the Singaporean dollar 7.6% and the Taiwanese dollar 7.4% since the start of the year.
In related news, the PDMO said the Finance Ministry has approved the issuance of baht-denominated bonds by the Lao government and Nam Ngum 2 Power Co.
Both foreign entities are required to issue the baht-dominated bonds or debentures in Thailand by May 31, 2018, and must use all proceeds from the debentures according to the terms and conditions specified by the Finance Ministry.
