Krungsri partners with Next Capital launching Thailand’s first THOR reference rate for long-term loan deals in response to BOT policy
Bangkok (9 July 2021) – Krungsri (Bank of Ayudhya PCL) together with Next Capital Public Company Limited launch Thailand’s first THOR interest reference rate for long–term loan deals, including a derivative contract with THOR reference (OIS) to support business in risk management and control of financial cost as well as responding to the Bank of Thailand (BOT)’s policy to uplift Thailand’s interest reference rate.
Mr. Prakob Phiencharoen, Krungsri Head of Corporate and Investment Banking Group said, “Krungsri partners with Next Capital Public Company Limited to implement THOR interest reference rate for 500 million baht long-term loans deal along with THOR reference derivative contract. This is regarded as Krungsri’ s achievement in implementing Thailand’s first THOR interest reference rate for long-term loans transaction after BOT has initiated THOR (Thai Overnight Repurchase Rate) as Thailand’s interest reference rate in order to accommodate the termination of interest reference rates to London Interbank Offered Rate (LIBOR) and Thai Baht Interest Rate Fixing (THBFIX). According to BOT’s guideline, THBFIX reference rate to new loan and bond transactions are advised to be ceased from 1 July 2021 onwards.”
Mr. Kenichi Nishii, Krungsri Head of Global Markets Group said, “THOR interest rate is to utilize secured overnight financing rate, making it a low credit risk funding rate mechanism. The calculation is based on the actual overnight repurchase rate so it provides a reliable interest rate reference. Thus, it reflects actual Thailand’s financial market condition and offers a less degree of fluctuation in comparison to THBFIX. Besides, THOR interest rate has also corresponded to the trend of Thailand’s interest rate policy. Krungsri intends to promote transactions that apply THOR in order to be in line with BOT policy to strengthen Thailand’s financial market stability, to promote the popularity of THOR application, and to contribute as one of the mechanisms to efficiently enhance the Thai financial market. Moving forward, Krungsri will also continue to develop a diverse range of financial innovations in correspondence with this national policy.”
Mr. Sura Khanittaweekul, Chief Executive Officer of Com7 Public Company Limited and Director of Next Capital Public Company Limited, said, “Our company is greatly honored to be part of the development of Thailand’s efficient financial market according to the BOT policy. Furthermore, this contractual derivative has well corresponded to the risk management policy of the company and is regarded as one of the paths to sustainable growth.”
Mrs. Alisara Mahasandana, Assistant Governor, Financial Markets Operations Group, Bank of Thailand (BOT), said “The initiative of loan transactions with THOR and contractual derivatives between Krungsri and Next Capital Public Company Limited has demonstrated the readiness of our participants. This also is considered a key milestone of Thai financial market in the development of THOR interest reference rate that will replace THBFIX interest reference rate moving forward. BOT would like to show appreciation and thank Krungsri together with Next Capital for your valuable cooperation with BOT in enhancing liquidity and promoting the application of THOR interest reference rate. In particular, this is the first transaction of long-term loan with THOR interest reference rate in Thailand. On behalf of BOT, we truly hope to see higher popularity of transactions with reference to THOR in Thai financial market in the near future”.