BTS Group Holdings (BTS), the first local issuer of green bonds in Thailand, plans to issue a green bond every year as an option for investors to finance its public transport projects.

Last year the company planned to issue a green bond worth 5 billion baht to finance its Pink and Yellow line skytrain projects. But the finalised total issuing amount was concluded at 13 billion baht, driven by eight times oversubscription.

The company reported yesterday its second green bond issuing was for a total of 8.6 billion baht (higher than the planned 5 billion baht at 3.3 times oversubscription). The bonds comprise five series with a maturity range of two to 10 years.

BTS chief financial officer Surayut Thavikulwat said the average maturity is 4.7 years and the average interest rate is 2.72%.

Tris Rating assigned a rating of “A” to the green bond on Sept 29. On that day, according to the Thai Bond Market Association (TBMA), the five-year government bond yield was 0.87%, and the corporate bond spread for 3-5 years duration of the rated “A” company was 1.85%.

“We plan to issue green bonds continuously in the future,” he said. “This financing will be a new option to optimise the company’s financial infrastructure, in addition to short and medium-term bank financing.”

Mr Surayut said this new type of bond finance has led to a strong response from investors looking for environmentally friendly projects.

When companies issue a corporate bond, they incur an expense in hiring a credit rating company to rate the bond and the company.

In issuing a green bond, he said, there are some additional expenses in hiring a company to give second opinions about the projects and a verifier company to verify whether the projects are green. The additional expenses for the two entities are worth millions of baht.

In Mr Surayut’s opinion, the expenses are worth it as the company’s projects can help reduce pollution and promote environmental and social governance goals at the same time.

“The Pink and Yellow skytrain lines can help reduce carbon dioxide by 28,000 tonnes a year in the greater Bangkok area when they start operation,” he said. “Mass transit trains can help reduce carbon dioxide by 30 grammes per one kilometre.”

The figures are based on the statistic that one car releases 50 grammes of carbon dioxide per kilometre, and the carbon dioxide produced by electric power to drive electric trains 1km.

Mr Surayut said BTS is considering whether the reduction in carbon dioxide can be sold as carbon credit.

The company has been approached by a Japanese organisation wishing to issue green bonds, he said.

Source: Bangkok Post

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