Thai bank plans to make nation's first sukuk offer

Bangkok: The state-run Islamic Bank of Thailand plans to raise 5 billion baht (Dh570 million) in the nation's first sukuk sale, joining borrowers from Singapore to India targeting investors from minority Muslim populations.

The Thai Securities and Exchange Commission plans to publish guidelines next quarter for companies to issue Sharia-compliant securities, Charuphan Intararoong, a spokeswoman for the regulator, said in an interview yesterday in Bangkok. The changes follow Prime Minister Abhisit Vejjajiva's pledge last year to let four southern provinces adopt more Sharia laws.

Thailand wants capital-market products because demand for Islamic services will increase in coming years to serve Thai Muslims, who account for 4.3 per cent of the 67 million population, Charuphan said. Bangkok-based Ayudhya Fund Management Co. and Malaysia's AmInvestment Management say they may buy the sukuk, which will fund lending in a $272 billion economy that expanded 12 per cent in the first three months from a year earlier.

Harmonisation

"We are looking further to harmonise the system to accommodate Islamic financial transactions," Islamic Bank of Thailand President Dheerasak Suwannayos said in a July 14 interview. "The size of the Thai economy is very large and the government also has many projects regarding infrastructure, which is the target of Islamic banks."

CIMB Thai Bank, a unit of Malaysia's biggest investment bank, will help structure the Thai lender's sale, Dheerasak said. Sukuk often derive income to pay their holders from property or projects such as roads and power stations.

"If the rating is good, we will be interested," Jessada Sookdhis, who helps manage $2.3 billion at Ayudhya Fund Management, said in an interview yesterday. "State enterprises normally get higher ratings."

The nation has a BBB+ credit rating from Standard & Poor's, the third-lowest investment grade. Finance Minister Korn Chatikavanij raised the 2010 growth forecast on June 29 to as high as 6 per cent from a March estimate of up to 5 per cent.

Singapore's central bank published regulations in May 2009 to help foster growth in the industry, while India's southern state of Kerala unveiled plans in December to sell sukuk to finance infrastructure projects. Global sales of sukuk fell 29 per cent.

By the numbers