More govt savings bonds to be issued

       Finance Minister Korn Chatikavanij yesterday said the government would issue a second tranche of bounds in October or Novermber.
       A Finance Ministry source said the issue would be worth Bt30 billiion to 50 bilion, with the exact amount depending largely on how much of the budget for the stimulus package had been spent: the more spent, the higher the amount of the issue.
       Maturity will be in five to seven years, the source said.
       This will come after an issue worth Bt80 billion last month.
       Previously, the Cabinet approved Bt220 billion as the first batch of a Bt400-billion stimulus package the government plans to spend this year.
       "The coupon rate will be cheaper, because market rates are lower now than at the time of the previous issue... There's a lot of demand[for savings bonds] from retail investors. Anyone issuing savings bonds right now will sell out, there's lot of liquidity out there," the source said.
       The coupon rates offered last month for the first tranche are about 4 per cent for the five-year bonds.
       The Bank of Thailand (BOT) on Thursday announced it would issue Bt50 billion worth of savings bonds with five to seven years of maturity and coupon rates of 3.5-6 per cent early next month.
       Asked whether the BOT's savings bonds would create a crowding-out effect, Korn disagreed. He said the government and the central bank had closely coordinated bond issues thus far. Moreover, the BOT's savings bonds will replace liquidity from government bonds issued five years ago, and liquidity will not dry up.
       He said there was as much as Bt1.7 trillion in excessive liquidity at present, quite a lot compared with next month's Bt50 billiion savingsbond issue from the BOT.