The Bond Market in Thailand

An ASEAN+3 Bond Market Guide Update

• Publisher: Asian Development Bank
• Year: 2021
• ISBN:
  9789292691943
• Topic: Business
• Subtopic: Financial Engineering
• Index: Business

The ASEAN+3 Bond Market Guide series provides member-specific information on the investment climate, rules, laws, opportunities, and characteristics of local bond markets in Asia and the Pacific. It aims to help bond market issues, investors, and financial intermediaries understand the local context and encourage greater participation in the region's rapidly developing bond markets. This edition focuses on updates in the bond market in Thailand since the publication of the ASEAN+3 Bond Market Guide for Thailand in 2016.

II

Legal and Regulatory Framework

This chapter reviews the significant changes or updates to rules and regulations, regulatory processes, and other official prescriptions by regulatory authorities and market institutions in the bond market in Thailand since the publication of the ASEAN+3 Bond Market Guide for Thailand in 2016.

C. Legislative Structure

Table 2.1 has been updated for regulations with a focus or impact on the bond market that have been introduced since the publication of the ASEAN+3 Bond Market Guide for Thailand. Many of these new regulations will be referenced or reviewed in detail in the relevant chapters and sections of this update note.

Table 2.1: Examples of Securities Market Legislation or Regulations by Legislative Tier

Legislative Tier	Content or Significant Examples
Constitution of Thailand	Principles, Rights, and Obligations
Statutes and acts (key legislation)	• Bank of Thailand Act B.E 2551, 2008 • Securities and Exchange Act B.E. 2535, 1992 • Public Debt Management Act B.E. 2548, 2005 • Tax on Income from Debt Instruments Received by Mutual Funds (Amendment Act No. 52), effective 22 August 2019 [NEW]
Subordinate legislation (regulations, notifications, orders, and rules)	• Notification of the Capital Market Supervisory Board No. Tor Jor. 44/2556 Re: Rules, Conditions and Procedures for Disclosure regarding Financial and Non-Financial Information of Securities Issuers (Codified; effective 1 January 2014) [NEW] • Notification of the Capital Market Supervisory Board No. Tor Jor. 17/2561 Re: Application for and Approval of Offer for Sale of Newly Issued Debt Securities (Codified; effective 1 April 2018) [NEW] • Notification of the Capital Market Supervisory Board No. Tor Jor. 61/2561 Re: Offer for Sale of Debt Securities of Thai Government Agencies (Codified; effective 1 November 2018) [NEW] • Notification of the Capital Market Supervisory Board No. Tor Jor. 62/2561 Re: Offer for Sale of Bonds Denominated in Foreign Currency in the Kingdom of Thailand (Codified; effective 1 November 2018) [NEW] • Notification of the Capital Market Supervisory Board No. Tor Jor. 63/2561 Re: Approval Rules on Offer for Sale of Newly Issued Bond of Foreign Entity Denominated in Thai Baht (Codified; effective 1 November 2018) [NEW] • Notification of the Office of the Securities and Exchange Commission No. Sor Jor. 1/2564 Re: Rules and Procedures for Preparation of Factsheet (effective 8 January 2021) [NEW] • Notification of the Capital Market Supervisory Board No. Tor Jor. 31/2564 Re: Application for and Approval of Offer for Sale of Newly Issued Sustainability-linked Bonds (Codified; effective 16 May 2021) [NEW] • Guidelines on Issuance and Offer for Sale of Green Bond, Social Bond and Sustainability Bond [NEW] • Guidelines on Issuance and Offer for Sale of Sustainability-Linked Bond [NEW]

B.E. = Buddhist Era, denotes a year in the Thai calendar.

Sources: SEC, ASEAN+3 Bond Market Forum Sub-Forum 1 team based on publicly available information.

E. Securities Issuance Framework for Debt Securities

The SEC adjusted the issuance types for private placements in 2018, aimed at improving the investor protection for HNWs and offering greater flexibility for offers to institutional investors. The SEC also introduced the ability to issue debt securities via a program, a feature that subsequently also became available to nonresident issuers wishing to issue both local currency- and foreign currency-denominated bonds in the Thai market. The more significant changes are reviewed in section F in this chapter as well as in Chapter III.E.

At the time of writing, the SEC was in the process of applying a regulatory guillotine concept, reviewing in its entirety the regulatory framework for the capital market, including for the bond market in Thailand. Some of the envisaged or expected changes to the regulatory framework are indicated in Chapter X.B.1.

F. Securities Issuance Regulatory Processes

Notification of the Capital Market Supervisory Board No. Tor Jor. 17/2561 Re: Application for and Approval of Offer for Sale of Newly Issued Debt Securities (Codified; effective 1 April 2018); Notification of the Capital Market Supervisory Board No. Tor Jor. 61/2561Re: Offer for Sale of Debt Securities of Thai Government Agencies (Codified; effective 1 November 2018); Notification of the Capital Market Supervisory Board No. Tor Jor. 62/2561 Re: Offer for Sale of Bonds Denominated in Foreign Currency in the Kingdom of Thailand (Codified; effective 1 November 2018); and Notification of the Capital Market Supervisory Board No. Tor Jor. 63/2561 Re: Approval Rules on Offer for Sale of Newly Issued Bond of Foreign Entity Denominated in Thai Baht (Codified; effective 1 November 2018) contained adjustments to the issuance types under a private placement. This affected the regulatory processes as well as disclosure obligations by issuers at the time of issuance and during the life cycle of the bonds. In addition, the SEC used the revised regulations to fine tune provisions for public offers.

Other SEC regulations revised at the time affected the issuance methods and regulatory processes for the issuance of bonds by nonresidents issued in Thailand and denominated in both Thai baht and foreign currency.

Details are mentioned in the following sections. Due to the ongoing review of the regulatory framework by the SEC, which is expected to result in further changes in the next 12 months, only significant changes to previous prescriptions have been included. A complete description of regulatory processes for all issuance methods will be contained in a next version of the ASEAN+3 Bond Market Guide for Thailand.

1. Regulatory Processes by Corporate Issuer Type

The SEC continues to apply the same regulatory processes for both nonfinancial institutions and financial institutions, other than with regard to the latter’s capital requirements, within the same issuance method. However, the revisions in SEC regulations in 2018 further distinguished between the issuance methods; while public offers for sale require the full approval of the SEC and now come with additional qualifications for an issuer to be eligible, the approval for a private placement targeted at HNWs follows the registration of the transfer restrictions by an issuer, subject to the completion of the prescribed issuance documentation. Issuers may now also avail themselves of program issuance.

Significant differences are explained in the following sections.

3. Issuance Process for a Nonresident (Foreign) Issuer

The issuance process as such for bonds issued by a nonresident issuer is the same as for a Thai issuer. An issuer shall submit an application for approval to the SEC to be eligible for issuing bonds to HNWs.

However, the issuance of bonds via a dedicated program has also become available to nonresident issuers following the concept’s introduction by the SEC in April 2018. Please see Chapter III.E for a detailed explanation of the issuance program concept.

4. Regulatory Process f...