PDMO issues 20 billion baht in ESG bonds

The Public Debt Management Office (PDMO) is set to issue 20 billion baht in sustainable bonds to institutional investors this year. The public debt advisor for PDMO, Jindarat Viriyataveekul, stated that these bonds are designed for businesses adhering to environmental, social, and governance (ESG) principles.

Sustainable bonds are a subset of ESG bonds, and PDMO currently has 467 billion baht in outstanding ESG bonds, accounting for 5.6% of its total bond portfolio. Jindarat confirmed that PDMO aims to issue ESG bonds annually to establish a benchmark for this type of financial instrument.

She remarked that the issuance of ESG bonds will continue annually to establish a benchmark for this type of bond.

In terms of international bond issuance, PDMO is evaluating the advantages and disadvantages to present a proposal to the finance minister. Foreign investors have shown interest in Thai government bonds, and Jindarat highlighted that issuing bonds abroad could set a benchmark for Thai companies looking to issue international bonds in the future.

She explained that the tactic of raising funds through issuing foreign currency bonds accommodates financial market volatility in cases where the domestic bond and financial markets are tight.

PDMO has the option to borrow from abroad under Section 22 of the Public Debt Management Act to support economic and social development when necessary. Thailand’s foreign currency public debt remains relatively low, but Jindarat pointed out that the cost of issuing foreign currency bonds is currently higher than domestic bonds.

“However, the primary factor for PDMO to consider is the cost of issuing foreign currency bonds, which is currently higher than issuing bonds domestically.”

Issuing foreign currency bonds could have several benefits, including providing the Thai government access to a wider range of funding sources and mitigating the risk of crowding out private sector capital. Additionally, it could serve as a reference cost for the Thai private sector to issue such bonds.

She added that another benefit would be providing a reference cost for the Thai private sector to issue such bonds.

The Thai Bond Market Association classifies ESG bonds into four categories: green bonds, social bonds, sustainability bonds, and sustainability-linked bonds, reported Bangkok Post.