Thailand, Philippines want no part of dollar bond boom

Bloomberg

Over in Asia’s booming dollar-bond market, there are two
notable absentees: Thailand and the Philippines.
The two countries are missing out on the rush to dollar-denominated debt, instead relying on their domestic fixed-income markets and lending from banks— something that’s unlikely to change anytime soon. Issuance from Thailand and the Philippines combined stands at a paltry $3.7 billion, compared with $15.7 billion out of Indonesia and $10.6 billion from India, according to data compiled by Bloomberg.
The ensuing turmoil born-out of Asia’s currency crisis in 1997 lives fresh in the memories of companies looking for capital twenty years later. In those days a far bigger proportion of bonds sold by the likes of Thai firms were in dollars and even the most casual student of the period will remember how that contributed to the collapse in their economies. Now, their lack of participation in the five-year long boom for debt in the US currency may well be a price worth paying.
“Most of these issuers have been affected by the Asian financial crisis and since have been very conservative in their US dollar bond issuance,” said Jean-Charles Sambor, London-based deputy head of emerging market fixed income at BNP Paribas Asset Management. “These two countries have a very conservative corporate sector.”
This year, the Philippines government is the only issuer out of the nation with a $2 billion offering in January, while Thai borrowers have sold just $1.7 billion. On a net basis—accounting for redemptions—the Philippines is shrinking its dollar bond pool and Thailand’s is only just in the green this year at $93 million.
Indonesian companies can’t always rely on its domestic banking system and often have a greater need for non-local currency funding. “Philippines and Thailand in particular have strong local currency bond markets,” said Todd Schubert, head of fixed-income research at Bank of Singapore, the private banking unit of Oversea-Chinese Banking Corp.