Krung Thai Bank sold a $700 million 10.5-year bond Thailand’s first ever Basel III instrument despite ongoing investor scepticism as to whether the government will extend extraordinary support to such instruments.
According to Standard Poor’s in a recent note, issue ratings on any Basel III-compliant subordinated debt by major Thai commercial banks are likely to be three to five notches lower that its long-term issuer credit ratings, prompting investors to exercise caution when it comes to buying these instruments.
This essentially reflects the rating agency’s view that the Thai government is unlikely to extend extraordinary support in the event the bank is deemed non-viable.
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