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US$7 billion in Thai bank bail out

US$7 billion in Thai bank bail out

(Thailand) - Thailand is issuing over US$7 billion in bonds this year to refinance failed bank and finance company debt. Bank of Thailand is offering 300 billion baht (US$7.14 billion) in bonds with 5-10 year maturities to the public, charity agencies and private savings cooperatives from mid-July to the end of August. A further 480 billion baht will likely be raised by the Bank through similar bonds by 2006.

The bonds are being used to rollover debt held by the Financial Institutions Development Fund (FIDF), a Bank of Thailand (BOT) unit established to bail out financial institutions hit by the 1997/98 Thai economic crisis.

These new bonds, mainly focussed on retail investors, are in addition to some 112 billion baht of 3-5 year FIDF bonds sold to institutional investors in the year ending September 2001, in turn on top of 500 billion baht of Government bonds issued in 1998/99 to raise funds for the same purpose. In addition to this earlier issued paper, the FIDF has also borrowed 315 billion baht from the local short-term money markets.
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