The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) plans to raise funds by issuing additional bonds worth 7 billion baht to cut financial costs.
The bank is working out details such as coupon rates, said president Mongkol Leelatham.
SME Bank's new batch of bonds is expected to be offered to both institutional and general investors in the final quarter of this year, he said.
The state-run bank earlier this year sold three-year maturity bonds worth 3 billion baht, with a coupon rate of 2.33%.
Mr Mongkol said the bank's second lot of bonds should be well-received by investors, given SME Bank's solid financial position as seen by AAA (tha) rating (the same as the Thai government) assigned by Fitch Ratings and the attractive coupon rate.
The planned bond offering is also aimed at bracing for future rate hikes and slowing rate volatility in the long run to improve the bank's cost management, he said.
The lifespan of the new bonds will not be longer than three years.
Proceeds from the bond issuance will be loaned small businesses, in accordance with government policy.
Funding cost management is an instrument to strengthen the bank's financial position, he said, noting the bank earlier could not raise funds by independently, due to the constraint of a high non-performing loan (NPL) ratio at 40%.
At the end of 2017, the bank's bad loans stood at 16.9 billion baht, representing 16.8% of outstanding loans.
SME Bank recently planned to divest 5.2 billion baht worth of bad loans that cannot be restructured as part of efforts to bring the NPL ratio below 10%.
Earlier this year, the State Enterprises Policy Commission allowed SME Bank to exit its rehabilitation plan after improved operating performance and reduced NPLs over the past three years.
The bank was among seven state enterprises under rehabilitation. The others are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Islamic Bank of Thailand.
SME Bank suffered a net loss of 4.03 billion baht in 2012 before rallying back to a net profit of 396 million in 2013 and 457 million last year.
