KASIKORNBANK arranges first credit facility using new Thai Overnight Repurchase Rate

Holding company Central Group received more than $20m under the credit facility.

Thailand’s KASIKORNBANK (KBank) and retail company Central Group have successfully arranged a more than $20m (THB650m) credit facility using the Thai Overnight Repurchase Rate (THOR) as a reference rate, according to a press release.

This is reportedly the first transaction of its kind in Thailand, and KBank said that it was gearing up to promote the THOR benchmark rate in line with the Bank of Thailand’s (BOT) guidelines for the benefit of customers in conducting financial transactions.

KBank President Patchara Samalapa further shared that KBank and Central Group have signed a financial accommodation agreement to offer the THOR-based credit facility in the amount of more than US$20m together with a cross-currency interest swap with floor, using THOR as a reference rate, in order to convert Central Group’s Baht-denominated debt with THOR interest rate into EUR-denominated debt in accordance with the retail conglomerate’s liability management policy.

Central Group—a holding company involved in merchandising, real estate, retailing, hospitality and restaurants—reportedly expects that the transaction will ensure efficient risk and cost management for the group.

The group is KBank’s first client to use such financial arrangements after the BOT announced the adoption of THOR as the new benchmark rate in April 2020.   

Based on the BOT’s guidelines, new transactions classified as loans, debt instruments and structured notes (Cash Products) based on Thai Baht Interest Rate Fixing (THBFIX) will be discontinued from 1 July 2021 onwards.

(US$1 = THB31.38)