ASIA CREDIT-Thai firms rush to sell bonds before rates go up

By Orathai Sriring and Arada Therdthammakun

BANGKOK, May 16 (Reuters) - The value of new corporate bonds issued in Thailand could rise by half this year and many firms want to sell them sooner rather than later to lock in low costs, as inflation could well force a rise in interest rates.

New issues worth 250-300 billion baht ($7.7-9.3 billion) are expected this year, compared with 195 billion last year, and a good proportion is likely to be sold in the first half, company officials and underwriters said.

"Nobody knows whether Thai rates have hit bottom. But funding costs now are still acceptable, so we decided to do it now," Chainarong Eursithichai, an executive at Krung Thai Bank, said of an issue of 28 billion baht of 10-year bonds later this month.

It is among several banks and companies that have already announced bond issues worth at least 88 billion baht by the end of June. Some might be increased, depending on demand.

Firms sold 65 billion baht of bonds in the first four months of the year, up 75 percent from a year earlier.

"We see rates moving up soon, and bond yields, so firms should rush to tap demand in the market or it will probably be too late," said another bank executive, who declined to be named.

Government bond yields <0#THTSY=> <0#THBMK> have risen up to 20 basis points (bps) since April after falling earlier this year, especially at the front end, on hopes of rate cuts in Thailand in response to a global economic slowdown.

Five-year government bond yields bonds TH5YT=RR were at 4.3 percent and seven-year debt TH7YT=RR at 4.67 percent on Friday. A five-year AAA-rated corporate bond yield was about 4.4 percent.