PTT and Krungsri in biggest THOR-based loan deal

The Bank of Thailand (BOT) congratulated PTT Public Company Limited (PTT) in collaboration with Krungsri (Bank of Ayudhya PCL) for the success of a THB 6 billion long-term loan facility using the overnight repurchase rate the Thai day (THOR) as the reference rate for a period of five years. The transaction marks the largest THOR-based lending facility since the launch of Thailand’s new THOR benchmark. PTT and Krungsri are considered the main drivers of confidence in the Thai financial market.

Ms. Pannalin Mahawongtikul, Chief Financial Officer, PTT Public Company Limited, revealed, “PTT is very grateful to be part of promoting financial market stability and development with Krungsri as a long-term partnership to align Bank of Thailand policies. This time, PTT agreed to accept Krungsri’s offer of a THB 6 billion long-term loan facility using the Thai Overnight Repurchase Rate (THOR) as the benchmark rate for a period of five years. This agreement is intended to encourage the use of THOR in light of PTT’s success as the first private company to spearhead the issue of THOR benchmark debentures last August. This loan facility marks PTT’s return to raising funds from commercial banks through a long-term loan in Thai baht for the first time in more than a decade. PTT plans to use the loan to expand its business in line with its vision of “Powering Life with Future Energy and Beyond”.

Mr. Seiichiro Akita, Chairman and CEO of Krungsri, said, “Krungsri and PTT have had a well-established relationship for over 30 years. As a partner bank, Krungsri has provided financial support to PTT and its subsidiaries through various opportunities through the synergy of Krungsri’s expertise and MUFG’s strong global network to foster the Company’s growth and its leadership in the energy sector at national and international level. As PTT expands its role as a financial market driver with Thailand’s largest THOR-based lending facility ever, Krungsri is extremely privileged to have the opportunity to work with PTT again as well as support the vital policy of the Bank of Thailand to develop the new reference rate in the financial markets.

Mr. Prakob Phiencharoen, Krungsri Head of Corporate and Investment Banking Group, added: “Since 2020, when BOT introduced and actively promoted THOR as the new Thai benchmark interest rate, replacing THBFIX, Krungsri and MUFG have realized the importance of this initiative as being critical to the development of Thai financial markets. and financial markets globally, similar to other countries that have replaced their benchmark with LIBOR-linked indices. We hope that this long-term loan based on the THOR benchmark rate that Krungsri has extended to PTT, one of Thailand’s leading conglomerates, will help promote greater awareness and confidence among market participants, including corporate clients. , financial intermediaries and institutional investors to build more THOR underlying financing and hedging transactions. This would then increase market liquidity and allow market participants to better hedge against interest rate risks.

Ms. Alisara Mahasandana, Deputy Governor, Capital Markets Operations Group, Bank of Thailand (BOT), said: “This THOR-based loan agreement reflects the confidence of commercial banks and large corporations in Thai companies such as PTT. This application of THOR is considered a prototype agreement that will foster market participants’ confidence in the use of THOR. The THOR is simply a reference rate for overnight loans allowing interest to be calculated at each loan repayment due date using the “Compounding in Arrears” method which is in accordance with international standards and commercial practices in the financial markets. . BOT would like to express its gratitude and appreciation to Krungsri and PTT for acting as key drivers in promoting the popularity of THOR-based lending transactions as well as building confidence among market participants in the application of THOR in accordance with international standards. This will certainly contribute to the smooth and timely transition of Thai benchmark rates from THBFIX to THOR.

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