PTT reviewing lending sources as rates increase

PTT reviewing lending sources as rates increase.

PTT Group is reconsidering the source of financing for its Bt200-billion investment plan, since credit from abroad will be priced higher due to the Bank of Thailand's withholding requirement on foreign funds.

"The group hasn't yet made a decision whether it will borrow from local or overseas institutions. That depends on whichever offers the best solution for us," PTT Plc president Prasert Bunsumpun said yesterday.

In the group's five-year investment plan, Bt50 billion of the Bt200-billion total will be for PTT.

Prasert said the group had several billions of baht of its own funds but needed to borrow more than Bt100 billion for the investment plan.

PTT Group had planned to approach foreign institutions that offered lower interest rates than domestic institutions. But since the central bank imposed capital controls, PTT has to shoulder another 30 per cent of any foreign loans. That has forced the group to adjust its funding plan to fit the new financial environment.

PTT targets its revenues this year will increase 5-10 per cent from Bt1.3 trillion last year, he said.

Also yesterday, PTT Exploration and Production (PTTEP) revised its 2007 investment budget to Bt70 billion from the Bt50 billion planned earlier.

The company plans to issue Bt3 billion-Bt4 billion worth of three-year bonds in the domestic market this quarter, said PTTEP's chief financial officer, Chatchawal Eimsiri.

The underwriter is yet to be named, he added.

"We've revised up our investment budget this year to around Bt70 billion to fund 32 exploration and production projects," PTTEP president Maroot Mrigadat said.

The increased budget will go to exploring for oil and gas in blocks M7 and M9 in Burma's Gulf of Martaban, as well as for oil and gas in Vietnam and Algeria, he said.

PTT Chemical also yesterday said it was considering issuing bonds worth US$200 million-$300 million (Bt7.2 billion-Bt10.8 billion) in the second half to fund its expansion plan.

The bond issuance is part of its attempt to raise up to $800 million over a three-year period starting this calendar year. Proceeds from the bond issue will be used for plant expansion and to build an olefins plant with annual capacity of one million tonnes.

"Our total investment over this three-year period would be around Bt100 billion, and we will raise funds of about $700 million to $800 million to partly fund the investments," CEO Adithep Bisalbutr said.

The rest of the funding will come from internal cash flow and the Bt28 billion raised from new shares offered late last year, he told reporters.

The bonds to be issued in the second half will be denominated in baht and then swapped into US dollars. The issue maturity will be up to seven years.

"We will issue the bonds in the domestic market and then swap [the proceeds] into dollars," which will have a lower funding cost than issuing dollar-denominated bonds, he said.

"Besides, it would be difficult at the moment to issue dollar-denominated bonds."

Capital inflows have slowed since the central bank imposed the withholding reserve on new capital inflows to reduce speculation on the baht, which had hit nine-year highs against the US dollar.

Chalida Ekvitthayavechnukul

The Nation, Agencies

The Nation
Thursday January 11, 2007