JBIC Provides Thai Baht Two-Step Loan First Asian Currency Loan under ABMI
NR/2005-38
September 15, 2005
September 15, 2005
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) today signed a two-step loan agreement totaling up to THB three billion, with each of Tokyo-Mitsubishi Bank, Mizuho Corporate Bank and SMBC providing THB one billion (see Appendix for schematic illustration of the loan).
- The funding of this loan comes from the baht bonds JBIC issued under the Asian Bond Markets Initiative (ABMI), which is being promoted by the Japanese government in the framework of ASEAN+3 (Japan, China and Korea).
- The loan will provide baht funds for Japanese firms conducting business operations in Thailand to finance their capital investments and related long-term working capital through Bangkok branches of Japanese commercial banks (Tokyo-Mitsubishi Bank, Mizuho Corporate Bank and SMBC). Among ASEAN member countries Thailand is increasingly becoming home to manufacturing industry clusters. This cluster effect has increased the country's presence as a production base. This has reaffirmed the importance of the country as a strategic base for Japanese firms seeking to enhance their global business development and such firms are increasing their investments in Thailand, in light of the economic partnership agreement (EAP) between Japan and Thailand and the progress being made toward a comprehensive economic partnership agreement between Japan and ASEAN. Thus local currency financing without exchange rate risk is expected to meet the extensive financial needs of local Japanese affiliates.
- JBIC considers it an important task to support bond market development in ASEAN member countries as well as China and Korea within the framework of the ABMI. In addition, bond issues in local capital markets enable the bank to meet increasingly diverse financial needs of Japanese firms through local currency lending. JBIC is therefore committed to increasing Asian currency bond issues, guarantee for Asian currency bond issued by Japanese affiliate and local currency lending to meet such financial needs based on consultations with the authorities in individual countries.
