Bangkok, Thailand, August 1, 2002—The
International Finance Corporation (IFC), TelecomAsia (TA), and its existing
lenders signed agreements in Bangkok yesterday enabling TA to proceed with
the launch of a partial credit guarantee by IFC. This landmark bond
issue is a first for the country.
The use of the guarantee by IFC is a significant step in its drive to contribute
to the further development of the bond market, and thereby the broader
capital markets, in Thailand. “The partial guarantee will set benchmarks
for larger corporate bond issues with longer maturities,” said Nina Shapiro,
IFC Treasurer. “Increasing issue size and maturity is one of the
best ways to increase market liquidity, which is often constrained by inadequate
supply of quality paper relative to demand.”
Under its agreement with TelecomAsia, IFC will provide partial credit guarantees
of up to Baht 3.375 billion (approximately US$75 million) covering around
50 percent of the longest term tranches of TA’s upcoming bond issue as
well as a subordinated loan of Baht 1.125 billion (or around $25 million).
The move is aimed at improving TA’s financial standing, while supporting
market development in Thailand. The new IFC-backed bonds will have
maturities of more than eight years, versus the corporate bond standard
of five.
TelecomAsia is a leading provider of telecommunications services in Thailand
offering fixed line telephone and other related information and communication
services. With its modern fixed line network in the Bangkok Metropolitan
Area, TA is positioned as a high quality provider of telecommunications
services to residential customers as well as all segments of the business
market.
“TA will be able to provide more and better information and communication
services to Thai consumers and businesses because of the greater financial
flexibility afforded by the long-term Baht financing,” noted Mohsen Khalil,
Director of IFC’s Global Information and Communication Technologies Department.
“TelecomAsia provides important services to the people of Thailand, and
the upcoming bond issue will make TA a stronger player in a competitive
industry important to economic growth and welfare,” said Tim Ryan, IFC
Country Manager for Thailand. “Our objective here is not only to
strengthen the bond market, but also to benefit the company and the country.”
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people’s lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through the close of the last fiscal year on June 30, 2001, IFC
committed more than $31 billion of its own funds and arranged $20 billion
in syndications for 2,636 companies in 140 developing countries. IFC’s
committed portfolio at the end of FY01 was $14.3 billion.