State bank delays first Thai Islamic bond again

State bank delays first Thai Islamic bond again

The issue of Islamic bonds worth $169 million has been repeatedly delayed.

November 9, 2010 11:40 by Reuters

State-owned Islamic Bank of Thailand has again delayed plans to issue the country’s first Islamic bond, but it could come in the first half of 2011 if market conditions are favourable, its president said on Tuesday.

The issue of Islamic bonds worth 5 billion baht ($169 million) has been repeatedly delayed, pending regulations governing the issuance of sukuk in Thailand.

“The SEC will meet next month and if everything is OK, it should be announced early next year,” Dheerasak Suwannayos told reporters, referring to the Securities and Exchange Commission.

“So if the market is good, we can probably do it in the first half. But it may be difficult if interest rates are on the rise.”

The SEC said in September it planned to implement its first sukuk regulations in October. Islamic bond issuance has been held up in Thailand by the absence of any regulatory framework.

The central bank left its benchmark interest rate steady at 1.75 percent last month, pausing after two straight rises, but it has said rates are still on a rising trend.

Dheerasak said the bank had also put on hold its plan to issue about 10 billion baht of Islamic bonds overseas, in order to assess global developments such as foreign exchange moves.

However, it planned to launch the country’s first Islamic property fund worth up to 1.4 billion baht in December, Dheerasak said.

The 30-year fund would offer a return of 5-7 percent a year, higher than 30-year government bonds, which currently yield about 3.8 percent, he said.

(Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Alan Raybould)