Thailand to launch 130 billion baht sustainability-linked bonds for 2025

The Public Debt Management Office (PDMO) is gearing up to introduce a sustainability-linked bond (SLB) valued at 130 billion baht for the fiscal year 2025. This move aligns with the country’s commitment to reducing carbon emissions and promoting the use of electric vehicles (EVs).

An initial release of bonds worth 20 to 30 billion baht (US$588 to 882 million) is anticipated this month, as stated by PDMO Director-General Patchara Anuntasilpa. This issuance includes the SLB406A bond series, which boasts a 15-year term and is primarily aimed at institutional investors, with insurance companies and cooperatives expected to show keen interest.

The distribution of these bonds will be managed by four underwriters: Bangkok Bank, Krungthai Bank, Bank of Ayudhya, and Standard Chartered Bank (Thai). The book-building process is set to occur on November 19, with the bonds officially issued on November 25.

Patchara Anuntasilpa, following a recent discussion with financial institutions regarding the SLB issuance, highlighted that these bonds will be associated with two national performance indicators: reducing greenhouse gas emissions by 388,000 tonnes of carbon dioxide equivalent by 2030 and increasing battery electric vehicle (BEV) usage to at least 440,000 vehicles annually by the same year. Presently, Thailand’s BEV usage stands at approximately 70,000 vehicles per year.

Failure to meet these targets will result in a penalty, increasing the SLB interest rate by 2.5 basis points per unmet goal. In the scenario where both targets are not achieved, the interest rate will rise by a total of five basis points. For instance, if the interest rate is initially set at 2% and both targets are not met, it will increase to 2.05%. Conversely, achieving the targets will lead to a reduction of 2.5 basis points per met indicator.

The PDMO currently holds sustainability bonds amounting to 480 billion baht (US$14 billion). After briefing domestic investors on this year’s SLB issuance plan, Patchara mentioned that the office will soon embark on a roadshow to engage foreign investors in Hong Kong and Singapore.

The bond issuance aligns with international standards from the International Capital Market Association and the ASEAN Capital Market Forum. Additionally, DNV, an independent global entity, has verified and certified the bond by providing second-party opinions, reported Bangkok Post.

Thailand’s commitment to the Paris Agreement includes reducing carbon emissions by 30 to 40% by 2030 from the current level of 555 million tonnes. Achieving a 30% reduction would entail cutting emissions by 222 million tonnes by 2030. Furthermore, Thailand aspires to achieve carbon neutrality by 2050 and attain net zero carbon emissions by 2065.