KINGDOM OF THAILAND BOND MARKET FINANCING THAILAND S FUTURE & CONNECTING ASEAN

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1 KINGDOM OF THAILAND BOND MARKET FINANCING THAILAND S FUTURE & CONNECTING ASEAN Highlights Dr. Pimpen Ladpli on The Issue of Liquidity & Regional Financial Market Integration ThaiBMA Best Bond Awards 214 : Deal of the year Progress Update» Committing to FY215 Fund Raising Plan» GOVT Bond Auction Schedule Q4/FY215» GOVT Bond Auction Results» Bond Switching Program Q4/FY215 : LB15DA» PDMO Bond Calendar FY215 Basic & Essentials» Bond Market Development Strategy» Public Debt Outstanding and Its Composition» Bond Market Capitalization and Its Composition» Baht Bond Outstanding and its Market Share» Non-Resident Holding in Domestic Bond Q4/FY215 Public Debt Management Office, Ministry of Finance, Kingdom of Thailand

2 Thai GOVT Bond Market Overview H i g h l i g ht Interviews Dr. Pimpen Ladpli on the Issue of Liquidity & Regional Financial Market Integration Dr. Pimpen Ladpli (Executive Director of Bond Market Development Bureau) ThaiBMA Best Bond Awards 214 : Deal of the year P r o g r e s s U p d a t e Committing to FY215 Fund Raising Plan T-Bill Plan Q4/FY215 GOVT Bond Auction Schedule Q4/FY215 GOVT Bond Auction Results Greenshoe Option: Privilege for MOF Outright PD Bond Switching Program Q4/FY215 : LB15DA PDMO Bond Calendar FY215 Public Debt Outstanding (as of May 215) Bond Market Capitalization (as of June 215) B a s i c & E s s e n t i a l s 5,687,8 THB Mil. (42.58% of GDP) 9,69,526 THB Mil. (7% of GDP) Total GOVT Debt (Direct + FIDF) (as of May 215) 3,988,29 THB Mil. (4 Bond Series ) *Excluding Foreign Debt Well-Developed Bond Market Improved GOVT Direct Debt Profile Dramatically (as of Jan 215)» Average-Time-to-Maturity (ATM) 11yrs 3mths» Average Cost 3.84%» Well-Balanced Fixed : Floating Ratio 89 : 11» Well-Distributed Maturity Profile 41:18:41 (<5 : 6-1 : >1yrs) *Excluding FIDF Liquidity & Secondary Market Trading 8% of Trading Volume (Outstanding > 1, THB Mil.) 26 Baht Bond Outstanding and its Market Share (as of June 215) 85,574 THB Mil. Non-Resident Holding in Domestic Bond (as of June 215)» Annual Capital Flow (YTD) -53,42 THB Mil. GOVT Bond : -29,783 THB Mil. BOT Bond : -23,259 THB Mil.» NR Holding in THB Bond 63,34THB Mil. (6.56% of Thai Bond Market Cap.) GOVT Bond : 595,7 THB Mil. (16.5% of GOVT Bond Outstanding) BOT Bond : 33,722 THB Mil. (1.2% of BOT Bond Outstanding) Others : 882 THB Mil. 29 3

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4 2 Interview with Dr. Pimpen Ladpli on the next tasks in FY 216..Enhancing Liquidity towards the longer end of the curve & Strengthening ASEAN Bond Market Integration.. Question: You ve been in charge of PDMO s bond market development since 27. Can you give an assessment on the key strategies for progress? Dr. Pimpen: Developing the bond market into a sustainable funding source became a National Agenda after the 1997 financial crisis. Through an active cooperation between Ministry of Finance and regulating agencies including, Bank of Thailand, Securities and Exchange Commission as well as primary dealers and investors, significant progress has been made. Dr. Pimpen Ladpli Executive Director of Bond Market Development Bureau PDMO s role in bond market development is to create debt issuance program that supports market deepening. In the initial stage, we focussed on the construction of an efficient government yield curve through consistent issuance of benchmark bonds. Then to further enhance the market s accessibility and efficient pricing, we encouraged liquidity by enlarging outstanding size. We also later began to promote product diversification through innovations to better respond to needs of specific groups or more sophisticated investors. Some of which include the inflation linked bonds that we are now extending its yield curve to 2-3 years through longer tenor issuance. And amortize bonds that has been popular with local life insurance companies since its inaugural 25 year issuance in 212, recently captured the interest of nonresident bond holders. While, infrastructures such as prefunding mechanism and newly introduced bond switching program, were developed to strengthen our debt management capability in reducing refinancing risk from large size bonds. The progress made has resulted from a mutually planned path of development. I cannot emphasize enough how important regular dialogue with regulating agencies and the market is to our progress. As policy makers, I believe our role is to accommodate rather than to direct how the market should grow. And through these dialogues we listen, exchange views and build development plans together. I am proud that the Thai bond market has matured in all aspects including size, liquidity and product diversification and is now a vital funding source for both government and private sector that supports the development of the nation.

5 We want to strengthen our capacity as a reliable partner for our neighbors, especially CLMV countries, to raise funds for their national development and support inclusive growth. Question: What are the goals that you would like to achieve going forward? Dr. Pimpen: There are two issues that I would like to achieve in the near future 1) financial integration and 2) liquidity enhancement of longer tenor bonds in the secondary market. AEC at year end undeniably brings both opportunities and challenges for Thailand and our bond market. We need to fulfill the missing links in infrastructure to enhance connectivity in the region. We have announced a transport investment package of 1.9 trillion baht to be implemented over the next 8 years, a majority of which will be funded with domestic debt issuance. I believe we are more than ready in terms of financing, as we have product diversification, a liquid market and fiscal space. For ASEAN to achieve regional integration, all member countries must grow together. PDMO has an important role to play in this issue. We have initiated the Baht Bond program to enable cross border fund raising that will support financial integration and inclusive growth. We have allowed CLMV countries that have limited domestic capital available to raise funds in Thailand for their infrastructure investments. Lao PDR government and state own enterprise, EDL-GEN, are among our recent issuers, while Myanmar and Bhutan have contacted us to express interest in fund raising in our bond market. In addition, Thailand was the selected regional pilot destination for ASEAN Bond Market Initiative (ABMI) program on facilitating the cross border fund raising through AMBIF s single submission form, using Mizuho s baht bond issuance. We hope that its success along with Laos PDR s and EDL-GEN s continued issuance will serve as case studies that will attract more countries to the Thai bond market and help us strengthen our capacity as a reliable partner for our neighbors to raise funds for their national development. In regards to knowledge transfers, we are also prepared to provide technical assistance to countries that want to further develop their own domestic bond market. In the past we have supported many training programs held by international agencies and welcomed individual government visits at our office. and what are your plans to enhance liquidity in the secondary market? Dr. Pimpen: Another important goal for us is to further enhance liquidity in the secondary market. A liquid bond market reflects a well-functioned bond market and helps create benchmarks for local borrowers. The system of benchmark bond issuance program has clearly improved our market s liquidity. Today our 5 year benchmark bonds are the highest secondary trading every year with the turnover ratio of around times. Thanks to our 14 MOF-outright primary dealers who play active role as market makers, I am pleased to say that 12 Thai government bond series are included in JPMCB Index, of which are all below 15 years maturity. I believe that the inclusion of Thai benchmark bonds in key indices enhances our presence in international financial markets and with current low interest rate levels; this is an opportunity to push longer tenor bonds into indices. Our target is to boost liquidity for our 2 year bonds. We have already open dialogue with primary dealers on the issue and will work closely with them to ensure that our goal can be achieved. 3

6 4 The inclusion of Thai government benchmark bonds in key indices enhances our presence in international financial markets. Question: Given global market increased volatility and potential rates hikes in the US together with low interest rate environment in Thailand, do you have any concerns about capital flow and nonresident bond holders? Dr. Pimpen: We encourage diversity as each group of investors brings unique contributions. This is why we continue to develop new products as each adds value by further broadening our investor base and deepening our market. This is also the case for non-resident investor (NR). Over the years the share of NR has gradually increased with greater exposure and recognition of Thai bonds among international investors. We like NR participation for 2 reasons; firstly they are active investors and so they help increase trade and turnover and secondly they tend to be more aggressive as we often observe tighter price when there is more NR participation. Our main concern in managing debt is its effects on macro stability. However, our experience has showed that even during times when NR share was high, volatility was minimal or has been at manageable level. For the past few years NR has steadied between 15-2%. I would like to stress that the important issue for us is to be able to raise funds at acceptable cost and while we welcome NR bond holders even in times of high volatility, our financial obligations can still be met as we have a rather deep bond market. On the issue of measures for restriction, we do NOT wish to interfere with the market. Close market monitoring and regular dialogues among policy makers and the market together with a deep domestic bond market can immune us from external shocks. So far our domestic market has showed resilience and has kept us away from imposing drastic measures.

7 5 I cannot emphasize enough how important regular dialogue with other policy makers and the market is to our progress.. Question: How important is an open dialogue with market players to PDMO s bid in achieving goals? Dr. Pimpen: I believe that the success in bond market development would not have been possible without the commitment from all market participants. Over the years, we have developed a trusting relationship that has resulted from close dialogue, long term planning and most importantly commitment to our promises. Every year PDMO organizes an annual market and quarterly primary dealer dialogues, semi-annual long term investor meetings and domestic and international roadshows. From time to time, PDMO join exhibitions like Money Expo and SET in the City both in Bangkok and major provinces to meet with retail investors who share about 5 percent of our investor base. The main dialogue,which is when we invite all market participants, takes place in the last month of the fiscal year in September. This annual dialogue draws about 2 participants who come to listen to funding needs and fund raising strategies of the government and state agencies. These meetings provide an opportunity for us to exchange information and receive feedback that guides us in the planning for future bond market development. They also help us align expectations and ensure that there are no unpleasant surprises for the market! We work hard to be committed regarding bond supply every year and will continue to do so. I believe this has been a key factor that has helped build investor s confidence in PDMO and in turn makes the Thai bond market more reliable and attractive. Even during times of crisis, we have been able to meet entire financing requirement with minimal effect on cost, reflecting our market s strength and resilience. Finally, as this is the last quarter of FY215, I would like to thank all the stakeholders for your efforts in the developing the domestic bond market. We look forward to working with you to build on the success.

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9 7 MOF s Bond Switching Deal of the Year ThaiBMA Best Bond Awards 214 The successful first launch of Bond Switching transaction in November 214, in an amount of 76,235 billion THB Deal of the Year Mr.Sommai Phasee, Minister of Finance (middle) Nattakarn Boonsri, Director of Government Bond Market Development Division and representatives from Bangkok Bank, Kasikorn Bank and Standard Chartered Thailand Mr. Sommai Phasee, Minister of Finance, (left) gives the Deal of the Year award to Mr. Nattakarn Boonsri, (right) on behalf of PDMO Mr. Theeraj Athanavanich, Deputy Director General of PDMO and representatives from Standard Chartered Thailand, Bangkok Bank and Kasikorn Bank at the Best Bond Awards press conference

10 8 Progress Update Total Fund Raising Plan FY215 T-Bill Plan Q4/FY215 GOVT Bond Auction Schedule Q4/FY215 GOVT Bond Auction Results Greenshoe Option: Privilege for MOF Outright PD Bond Switching Program Q4/FY215 PDMO Bond Calendar FY215

11 LBF14NA LB14DA LB155A LB157A SB15NA LB15DA SB165A LBF165A SBST166A LB167A LB16NA SB16DA LB171A LB175A LB176A LB17OA LB183A LB183B SB189A LB191A LB193A LB196A LB198A LB19DA LB26A LB213A LB214A LB21DA ILB217A LB22NA LB233A LB236A LB244A LB24DA LB25DA LB26A Top-up LB21DA Top-up LB25DA LB267A LB27DA ILB283A LB283A LB296A Top-up ILB283A Top-up LB296A LB316A LB326A Top-up LBA37DA LBA37DA LB383A LB396A LB46A LB416A Top-up LB446A Top-up LB616A 9 ALL FY215 Government Bond Benchmark Bonds Inflation-Linked Bonds Amortized Bond : yrs : ILB 15-yrs : LBA 25-yrs THB Mil. 3, Total Benchmark Bonds Loan Bonds Innovative Bonds (announced Sep 214) Series 5-yrs (LB21DA) 1-yrs (LB25DA) 15-yrs (LB296A) 3-yrs (LB446A) 5-yrs (LB616A) ILB (ILB283A) LBA (LBA37DA) 445,xxx MB Total 35,xxxMB 95,xxxMB 5 Actual Total Benchmark Bonds (expected Sep 215) Series Q4 FY15 Total NEW 5-yrs (LB26A) 4, 5-yrs (LB21DA) - Loan Bonds 1-yrs (LB25DA) 2, 15-yrs (LB296A) 12, 3-yrs (LB446A) 14, 5-yrs (LB616A) 7, Innovative Bonds ILB (ILB283A) - LBA (LBA37DA) 2, FY15 Total 113, (25.5%) 442,962 MB 359,654 MB 83,38 MB 442,962 MB (99.5%) 5 2, 1, 5New-Issue

12 FY 215 T-Bills Plan Q4/215 THB Mil. Basis Points 75, 6, Q1 Q2 Q3 Q , 4.5 3, 3. 15, , -3, -45, , -75, T-bill (Allocated Amount) Participated Amount (Excess Demand) Spread [AAY-Yield(T-1)] Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep

13 11 Auction Date New LB26A 5-yrs Exclusivity Government Bond Auction Schedule for Q4/FY215 LB25DA 1-yrs LB296A 15-yrs LBA37DA 25-yrs Amortized Bond LB446A 3-yrs LB616A 1 July July 215 2, 9, 29, 15 July 215 1, 1, 22 July July 215 1, 1, 5 August August 215 6, 6, 12 August August 215 2, 2, 26 August 215 7, 7, 2 September 215 1, 5, 15, 9 September 215 1, 1, - LB26A = Re-open LB25DA = Re-open LB296A = Re-open LBA37DA = Re-open LB446A = Re-open LB616A = Re-open 5-yrs Total 16 September September 215 6, 6, - 3 September 215 Total 4, 2, 12, 2, 14, 7, 113, Coupon 2.55% 3.85% 4.875% 4.26% 4.675% 4.85% Maturity Date 26-Jun Dec Jun Dec Jun Jun-261

14 12 21 Oct Oct Oct Oct Nov Nov Nov Dec Dec Dec Dec Jan Jan Jan Jan Feb Feb Feb Feb Feb Mar Mar Mar Apr Apr Apr Apr May May May May Jun Jun 215 FY 215 Government Bond Auction Result Classified by Quarterly Auction Schedule GOVT Bond Auction is decoupled from political situation THB Mil. Short-term Benchmark Bond (<1 yrs) Long-term Benchmark Bond (>1 yrs) Inflation-linked Bond Amortized Bond Participated Amount (Excess Demand) Not Fully Allocated or Subscribed Spread [AAY-Yield (T-1)] MPC 1.75% MPC 1.5% 11 th Mar th Apr 215 bps 1, 25 8, 75, , 15 4, 2, T-1= - -2, -4, 44,9 41,142 36, , , , ,26 13,95 16,85 1,82 14,194 15,275 17,766 13,496 15,48 18,438 22, , , ,84 1,725 12,1 3,28 4,35 6,525 7,6 8,563 1, ,3 2, 7,978 4, 5,972 4, 5,97 9, 12, 9, 5, , 9, 23,976 14,198 9, 3,788 4,438 6, 5, 6,16 23,83 1, 5, 14, 9, 24, 9, 7, 13, 8, 5, 1, 23,779 7, , , -2 Q1-Q3 FY215 GOVT Bond Auction Results Classified by Tenor Million Baht 1, Benchmark Bond 5 1yr 5yr (Exclusivity) Benchmark Bond 15 5yr 1yr 15yr 3yr 5yr Bps 25 8, 2 6, 15 4, 1 2, T-1= - -2, -4, ,976 3,83 4, 3, , ,84 3, ,212 2, 2, 2, 2, 2, 12, 14,198 14, 13, 7,978 9, 6, , 9, 9, 1, 8, 5,972 3,788 6, 7, 7, , -8, Short-term Benchmark Bond (<1 yrs) Long-term Benchmark Bond (>1 yrs) Greenshoe Amount Not Fully Allocated or Subscribed Average Accepted Yield -15-2

15 13 Greenshoe Option Privilege for MOF Outright PDs In FY215 Series LB21DA (5-Yr Benchmark Bond.. Exclusivity) Accepted Rate Average Accepted Yield (AAY) Maximum Amount Additional 2% of the allocated amount Exercise Period T (After Auction Period between a.m.) Settlement Date T+2 -Done- -Done- -Done- -Done- LB21DA 1 st auction 2, MB. 21 Oct 14 3,976 MB. 3,83 MB. 4, MB. 3,779 MB. Greenshoe Greenshoe Greenshoe Greenshoe - 4, MB. LB21DA LB21DA LB21DA LB21DA LB21DA 2 nd auction 3 rd auction 4 th auction 5 th auction 6 th auction 2, MB. 2, MB. 2, MB. 2, MB. 4,442MB. 14 Jan Feb Apr 15 3 Jun 15 Auction + Greenshoe = 1, - 116, MB. Greenshoe Option will begin in January 215 regarding to the readiness of the BOT s add-on electronic auction system

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17 LB157A LB15DA LBF165A LB167A LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A LB198A LB19DA LB26A LB213A LB214A ILB217A LB21DA LB22NA LB233A LB236A LB244A LB24DA LB25DA LB267A LB27DA ILB283A LB283A LB296A LB316A LB326A LBA37DA LB383A LB396A LB46A LB416A LB446A LB616A, 86,632 96, , ,985 Bond Switching Transaction for LB15DA THB Mil. 35, 3, 25, Source Bond Destination Bond Switched Amount Reduce Refinancing risk : 132, THB Billion 68,4 THB Billion Lengthen Time-to-maturity : 6 mths 11 yrs mths Enhance Liquidity : New Issued = 63,96 THB Billion Bond TTM New Issued Amount (THB Mil. Percentage LB183B 2 Yrs. 9 months LB26A 5 Yrs., LB25DA 1 Yrs. 6 months 9, LB296A 14 Yrs. 1, LBA37DA 22 Yrs. months Total, 1 2, 15, LB15DA -63,96 THB Mil 1, 5, Every Group of Investors has participated in Bond Switching Foreign Investor Financial Institution 38% 6% Long-term Investor 56% Bond Switching Participated amount classified by Investor Investor Amount THB Mil. Percentage Long-term Investor 35,77 56% Financial Institution % Foreign Investor 3,963 6% Total 63,96 1% Investor Segmentation in Bond Switching classified by Destination Bond LB183B Yrs. months 6,487 Mil 81% LB26A Yrs. 12,848 Mil. 7% 8,1 Mil 84% LB25DA Yrs. months 8,8 Mil 83% LB296A Yrs. 14,97 Mil 86% LBA37DA Yrs. months Long-term Investor Financial Institution 1,552 Mil. 19% Foreign Investor 3,837 Mil. 21% Long-term Investor Financial Institution 1,66 Mil. 9% Foreign Investor Long-term Investor 1,152 Mil 12% 44 Mil 4% Financial Institution Foreign Investor Long-term Investor 1,58 Mil 12% 2 Mil 2% Financial Institution Foreign Investor Long-term Investor 2,223 Mil 13% Financial Institution 21 Mil 1% Foreign Investor 15

18 16 Q1 Q2 Oct 214 Nov 214 Dec 214 Jan 215 Feb 215 Mar 215 PDMO Bond Calendar FY 215 Mon Tue Wed Thu Fri First day of submission for Baht Bond Application (1/215) Auction LB21DA (5y) : 2, MB ILB283A (15y) : 4, MB Roadshow Debt Switch : Announce Destination Bonds Auction LB296A (15y) : 8, MB LB616A (5y) : 9, MB MPC MOF Outright PD Committee : Annual PD's Evalution Quarterly Macroeconomics Report (FPO) Issue Regular Saving Bond 2/215(3y) : 4, MB (1 Dec Mar 15) Retail Only Auction LB25DA (1y) : 12, MB ILB283A (15y) : 4, MB Last day of submission for Baht Bond Application (1/215) H.M. the King's Birthday MPC First day Issue Special Saving Bond (5y and 1y) : 1, MB Retail Only Auction LB25DA (1y) : 16, MB ILB283A (15y) : 5, MB MPC Last day Issue Special Saving Bond (5y and 1y) : 1, MB Quarterly Macroeconomics Report (FPO) Auction LB616A (5y) : 6, MB ILB283A (15y) : 5, MB MOF Outright PD Committee : Quarterly PD's Evalution First day of submission for Baht Bond Application (2/215) MPC Retail Only 31 1

19 17 Q3 Q4 Apr 215 May 215 Jun 215 Jul 215 Aug 215 Sep Last day of submission for Baht Bond Application (2/215) Chakri Day 7 First Day of submission for MOF Outright PD's Application Baht Bond 2/FY Songkran Festival Day 14 Songkran Festival Day 15 Auction LB296A (15y) : 9, MB Songkran Festival Day Public Holiday Auction LB21DA (5y) : 2, MB LBA37DA (25y) : 9, MB 28 Last Day of submission for MOF Outright PD's Application 5 Coronation Day 6 23 Long-term Investor Meeting Quarterly Macroeconomics Report 1 National Labour Day 2 3 Auction LB616A (5y) : 7, MB MPC (FPO) (Only Bank closes) Auction LB25DA (1y) : 13, MB 4 11 Issue Regular Saving Bond 2/215(3y) : 4, MB (11 May - 31 Aug 15) Retail Only Auction LB446A (3y) : 8, MB MOF Outright PD Committee : Quarterly PD's Auction ILB283A (15y) : 5, MB Evalution CGIF MOC Meeting Euro Money BKK Bond Switching Roadshow Visakha Bucha Day 2 3 Auction LB21DA (5y) : 2, MB MPC Quarterly PD Market Dialogue Bond Switching Transaction Auction LB616A (5y) : 7, MB on LB15DA 3 1 New Mid-year Bank Holiday 7 5Y 8 Auction LB26A (5y) : 2, MB LB446A (3y) : 9, MB 2 First day of submission for Baht Bond Application (3/215) Auction LB25DA (1y) : 1, MB Quarterly Macroeconomics Report (FPO) Auction LBA37DA (25y) : 1, MB Asarnha Bucha Day Buddhist Lent Day Last day submission for Baht Bond Application MPC 11 Auction LB296A (15y) : 6, MB 12 H.M. The Queen's Birthday Baht Bond 3/FY MOF Outright PD Committee : Auction LB26A (5y) : 2, MB Final Review Auction LB616A (5y) : 7, MB Auction LB25DA (1y) : 1, MB LB446A (3y) : 5, MB Auction LBA37DA (25y) : 1, MB Annual PDMO-Market Dialogue MPC + MOF Awards Auction LB296A (15y) : 6, MB Remark : Royal Ploughing Ceremony Day- waiting for an annoucement This schedule is subject to change without prior notice.

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21 19 Basic & Essentials Bond Market Development Strategy Public Debt Outstanding Bond Market Capitalization Total GOVT Debt (Direct + FIDF) Liquidity & Secondary Market Trading Baht Bond Outstanding and its Market Share Non-Resident Holding in Domestic Bond

22 2 Domestic Bond Market in Transition Funding Infrastructure Investment Connecting ASEAN Sustainable Source of Fund Regional Connectivity / AEC Debt Folio Enhancement Market Infrastructure Innovation / Product Development Market Consultation Market Deepening Oriented (21-212) Water Decree (35, THB Mil.) Thai Khem Khang (35, THB Mil.) Baht Bond (Foreign Issuers Bond) ATM Lengthened Cost Lowered FIDF Decree Passed = 7, THB Mil. Fiscal Space Appointed 14 MOF-Outright PD Activated Public Debt Management Fund Inaugural 1-yr Inflation-Linked Bond (1-yr) Long-term Fixed Promissory Notes ( yr) Electronic Retail Savings Bond (3-5-yr) Annual PDMO Market Dialogue Quarterly PDMO one-on-one PD Dialogue Funding Infrastructure Investment Connecting ASEAN ( ) 2,, THB Mil. Long-Term Infrastructure Inv t 2,4, THB Mil. Long-Term Infrastructure Inv t Full Funding Capacity : 1,15, THB Mil. Credit Guarantee Investment Facility (CGIF) Foreign Currency Bond Baht Bond (CLMV) Well-Distributed Investor Base Well-Balanced Fixed-Floating Ratio Well-Distributed Maturity Profile / Bond Switching Bond Switching (1 st execution: 28 Nov 14) Strengthening PD system (Exclusivity, League Table, Greenshoes Option) STRIPS Bond Scripless Retail Savings Bond Liquidity Super- Size Inaugural 25-yr Back-End Amortized Bond Re-open ILB 7-yr or Launch ILB-3yr STRIPS Transaction Annual PDMO Market Dialogue Quarterly PDMO one-on-group MOF Outright PD Dialogue Ongoing Project Building Yield Curve / Enhancing Liquidity Tenors of Benchmark Bonds 3, MB 15, MB Outstanding Amount Liquidity-Oriented

23 FY FY 211 FY 27-1 FY27 FY216 Innovation of GOVT Debt Securities 3-yr Benchmark Bond Floating Rate Bond Step-up Savings Bond Lengthen average-time-to-maturity of Total Government Debt Portfolio Meet Long-term investors demand Increase floating debt ratio of Total Government Debt Portfolio Promote BIBOR (Bangkok Interbank Offered Rate) Broaden investor base Retail investors Low interest burden at the initial periods of bond Fixed Rate Promissory Note 5-yr Benchmark Bond 1-yr Inflation-Linked Bond (ILB) Electronic Retail Savings Bond Amortized Bond Bond Switching & Consolidation Broaden investor base Insurance / Long-term investors Non-Benchmark tenors Combat low interest rate + Lengthen average time-to-maturity 4 th country in the world (1 st : UK 2 nd : France 3 rd : China) Strong anti-inflationary signal Deepen the Development of the Bond market 1 st country in Emerging Asian Economies Lower Minimum Amount to Purchase / Offer throughout the year Develop the retail bond into an electronic form Scripless System Can be purchased via ATM, in addition of Bank Retail Branches Suitable financing instrument for the government s investment mega-project in the form of PPP Pay back the bond principal by installments Promote the government s fiscal discipline Allow both issuer and investors to improve their portfolio Larger outstanding size + Less bond series Enhance liquidity in the secondary market Upgrade PD Privileges PDDF Activated (Public Debt Restructuring and Domestic Bond Market Development Fund) 15-yr ILB 3-yr ILB Baht Bond CGIF Activated (Credit Guarantee and Investment Facility) Equilibrium of Domestic Bond Market Issuers Credit Rating Investors 76 percent of Thailand s debt securities are issued by Government, Bank of Thailand and State-Owned Enterprises 99 percent of Thailand s debt securities are classified as Investment Grade Thailand s government debt securities are held by a wide group of investor types SOEs 8% Domestic Bond Market (Classified by Issuers) CGIF.3% Corp Bond Baht Bond 1% 23% Government BOT 3% 38% AA 4% SOEs 8% Domestic Bond Market (Classified by Credit Rating) A 12% BBB 3% 1% BOT 3% BB & Non-rated Government 38% Government Debt Securities (Classified by Types of Investors) Household and Non-profit BOT 5% BOT 6% 5% NR NR 17% 17% Depository Corporation Depository Corporation 33% 33% Insurance and Other Corporation 36% 4% Total of 9.6 THB Trillion Total of 9.6 THB Trillion Total of 3.5 THB Trillion Source : ThaiBMA (End of June 215) Source : ThaiBMA (End of June 215) Source : BOT (End of May 215) 21

24 22 Public debt Outstanding (as of June 215) = 5.69 THB Trillion (42.58% of GDP) Components of Public Debt Units : THB Mil. 1. Government Debt (excluded FIDF) 3,31, Government Debt (for FIDF) 1,31, Non-Financial State Enterprise Debt 1,49,9 4. Special Financial Institutions Guaranteed Debt 568, Autonomous Agency Debt 6,132 Public Debt Outstanding 5,687,8 *including 75,393 THB Mil. of External Debt * Special Financial Institutions Guaranteed Debt 9.99%.57 THB Trillion Non-Financial State Enterprise Debt 18.45% 1.5 THB Trillion GOVT Debt (for FIDF) 18.14% 1.3 THB Trillion Autonomous Agency Debt.11%.6 THB Trillion GOVT Debt 53.31% 3.3 THB Trillion Source : Information Technology Centre, PDMO

25 Jun215 Bond Market Cap. = 9.6 THB Trillion GOVT Bond = 3.6 THB Trillion ($286 Bil.)* ($18 Bil.)* % Share of GDP 14% 12% 128% Domestic Bond Market Classified by Issuer 1% 8% 6% 14% 96% 7% 4% 2% % Asian Fin. Crisis 24% 12% Bank Loan /GDP Equity/GDP Bond Market / GDP Maturity Profile BOT vs GOVT Bond 9% BOT ATM = 5mths GOVT ATM = 9yrs 6mths *End of Jun % 18% 22% 16% 24% 33% 1 1<yr 3 3<yr 5 5<yr 1 1<yr 5 *Source: BOT Exchange rate as End of Jun 215 End of June, 215 Full Capacity* of All Government Funding Instruments * Under favorable market liquidity + using All funding instruments 1,15, THB Mil. per Year ($34 Bil.)** % TTM LB 3 yrs 15, THB Mil. LB 5 yrs 12, THB Mil. LB 7 yrs 8, THB Mil. LB 1 yrs 8, THB Mil. LB 15 yrs 6, THB Mil. LB 2 yrs 6, THB Mil. LB 3 yrs 3, THB Mil. LB 5 yrs 2, THB Mil. Benchmark Bond ($4.4 Bil.) ** ($3.5 Bil.) ($2.4 Bil.) ($2.4 Bil.) ($1.8 Bil.) ($1.8 Bil.) ($.9 Bil.) ($.6 Bil.) 1 15 Source: ThaiBMA Government Bond Yield Curve (End of Jun 215) 2 The Missing Composition of Leader role in the Bond Market Infrastructure liquidity Benchmark Bond Thailand s Loan Bonds (LBs) weighting in international indices GBI-EM Global JP Morgan iboxx Asia ex Japan Markit Asian Local Markets HSBC 7.7% Last Update : Jun ($17.7 Bil.) ($3. Bil.) ($3. Bil.) ($2.4 Bil.) ($1.2 Bil.) ($.9 Bil.) ($5.9 Bil.) ($34 Bil.) 9.5% 7.9% Government Funding Instruments 5 Benchmark Bond ~6,THB Mil. (52%) Savings Bond ~1,THB Mil. (8%) Amortized Bond ~1,THB Mil (8%) Inflation-Linked Bond ~8,THB Mil. (7%) Promissory Note ~4,THB Mil. (4%) Floating Rate Bond ~3,THB Mil. (3%) Bank Loan ~2,THB Mil. (18%) Total 1,15, THB Mil. (1%) **Source: BOT Exchange rate (End of Jun 215) 23

26 24 Keep our word to get investors confidence for the plan Unit : Million Baht 1,25, Lower-than-expected disbursement of Water Decree Lower-than-expected disbursement of Water Decree 1,, 75, Stimulus package to ease: US financial crisis Economic Recovery Higher-than-expected revenue collection Delay of Infrastructure Investment Plan Pro-Active Debt Management: Bond Switching 5, -6% -1% 25, +2% % -3% +5% 74% end of June 215 Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan: Actual: Announced Government s funding need at PDMO s Annual Market Dialogues in September Actual fund raising at the end of fiscal year (calculated from announced auction) The difference between the announced and the actual supply of benchmark bond (% share) Benchmark Instruments are Benchmark Bonds : Standard Loan Bond (LB) tenors yr (in FY 215) + Innovative Products : Inflation-linked Bond (ILB) + Amortized Bond (LBA) Regular issuance/ Consultation with PDs/ Pre-announced auction table Other Instruments : Saving Bond, Floating Rate Bond, Promissory Notes, Bills and Bank Loan

27 81, , ,348 15, ,367 4,233 11, ,325 79,5 5,664 59,141 43, 239, ,672 2,2 41,9 33,581 9, 6,5 149,985 5,5 2, 95,936 76, 29,8 27,8 151,92 1,872 18,9 35, 12, 8, 16, 24,7 13, 86,63 13,423 3,385 2, 1, 22, 17,44 36,73 25, 37,9 4, 71, 74, 6,731 67, ,863 81,958 11,8 69, 28, ,85 128, Total Domestic GOVT Debt = 3.99* THB Trillion * Excluding 75,393 THB Mil. of Foreign Debt Average-Time-to-Maturity (ATM) = 9yrs6mths Average Cost = 3.87% Fixed : Floating = 88 : 12 As of May 215 Assumptions : 6 months BIBOR = 1.79%, 6 months Fixed Deposit Rate = 1.23%, Inflation = -1.27% 4, 3, FIDF 1 FIDF 3 GOVT Debt (for FIDF) = 1,31,568 THB Mil. ATM = 4yrs 8mths Avg. Cost = 3.93% Fixed : Floating = 87: 13 Callable = 1% 57% Maturity Profile 2, 33% 1% 1, Next 5 yrs 6-1 yrs 1 yrs + TTM Fiscal Year 4, 3, Budget Deficit T-Bill TKK On-lending Loan Water Decree GOVT Direct Debt (exclude FIDF) = 2,956,461** THB Mil. ATM = 11yrs 3mths Avg. Cost = 3.84% Fixed : Floating = 89: 11 Callable = 6% 41% 18% Maturity Profile 41% 2, Next 5 yrs 6-1 yrs 1 yrs + 1, TTM Fiscal Year bt Well-Developed Bond Market Improved GOV T Direct Debt Profile Dramatically (1) ATM Lengthened (2) Cost Lowered (3) Well-Balanced Fixed-Float Ratio (4) Well-Distributed Maturity Profile Note : Government Direct Debt = 2.96 THB Million (exclude FIDF) As of Dec 27 As of May 215 Average-Time-to-Maturity LENGTHENED by 6yrs ATM 5yrs 3mths ATM 11yrs 3mths Avg. Cost LOWERED by 66 bps. (While ATM Lengthened by 6yrs) Avg. cost 4.5% Avg. cost 3.84% Well-Balanced Fixed/Floating Ratio (Target : Fixed/Float ratio = 85 : 15) Floating 1% Fixed 9% Floating 11% Fixed 89% Well-Distributed Maturity Profile (Maturing Debt in the next 5 yrs is less than 5% of Total Debt) 54% 28% 18% next 5 yrs year yrs + 41% 18% 41% next 5 yrs year yrs + 25

28 LB157A LB15DA LB167A LB16NA LB171A LB175A LB176A LB17OA LB183A LB183B LB191A LB193A LB196A LB198A LB19DA LB26A LB213A LB214A ILB217A LB21DA LB22NA LB233A LB236A LB244A LB24DA LB25DA LB267A LB27DA ILB283A LB283A LB296A LB316A LB326A LBA37DA LB383A LB396A LB46A LB416A LB446A LB616A LB21DA LB21DA LB196A LB176A LB236A LBA37DA LB616A LB296A ILB283A LB25DA ILB217A LBA37DA LB616A LB296A ILB283A LB25DA LB416A LB183B LB446A LB17OA LB27DA LB193A LB213A LB326A LB15DA LB191A LB283A LB16NA LB198A LB167A LB233A LB446A LB267A LB24DA LB175A LB316A LB171A LB214A LB19DA LB157A LB244A LB22NA LB183A LB46A LB26A LB396A LB383A Outstanding size (THB Mil.) Total GOVT Bond = 4 Series (End of June 215) Tier 1 > 1, THB Mil. in Size (8% of Trading Volume) Tier 2 > 5, THB Mil. in Size (15% of Trading Volume) THB Mil. 35, 3, Tier 1: >1,MB (1 Series) 5 FY215 Q3 Market Share of Trading Volume in Secondary Market Tier 1 Tier 2 8% 15% 5% 25, 5 1 2, 15, 1, LBA ILB Tier 2: 5, 1,MB (15 Series) 5, FY 215 on-the-run Benchmark Bond Source : ThaiBMA FY 215 on-the-run Innovative Bond Well-Distributed Bond Maturity Profile (End of June 215) The outstanding size of loan bond maturing in the next 5 years is 1,257,41 THB Mil. (38% of Total GOVT Bond) THB Mil. 35, 3, 5 Current Outstanding THB 1 Bil. Current Outstanding = THB 5-1 Bil. Current Outstanding THB 5 Bil. FY 215 on-the-run Benchmark Bond FY 215 on-the-run Innovative Bond 25, 2, LBA 25 15, 1 ILB , 3 5, TTM 26 Source : ThaiBMA years 11 5 years

29 LB15DA LB196A LB176A LB21DA LB25DA LB191A LB236A LB296A LB193A LB446A ILB217A LB17OA LB26A LB16NA ILB283A LB27DA LB167A LBA37DA LB183B LB46A LB233A LB175A LB616A LB171A LB157A LB416A LB396A LB24DA LB283A LB316A LB383A LB326A LB22NA LB183A LB198A LB213A LB244A LB267A LB19DA LB214A 27 FY215 Secondary Trading Volume Classified by Turnover Ratio As of June 215 THB Mil. 35, 3, 25, Top 1 Turnover Ratio includes 3 series of on-the-run Benchmark Bond ( yr ) 12 GOVT Bond series are included in JPMCB Index 3 of which are on-the-run Benchmark Bond ( yr) Turnover Ratio 3.5 Current Outstanding THB 1 Bil. Current Outstanding = THB 5-1 Bil. Current Outstanding THB 5 Bil. FY 215 on-the-run Benchmark Bond 3. FY 215 on-the-run Innovative Bond Bond Switching : Source Bond GBI-EM Thailand - JPMCB Turnover Ratio (time) 2.5 2, , 1.5 1, 1. 5, Source : ThaiBMA BS Turnover Ratio.1 2. Nearly No Trading

30 28 FY28-FY214 Key Success Indicators 1. Trading Volume 2. Turnover Ratio 3. Demand Concentration 4. Auction Price Benchmark Bond 5 yrs and Below : Highest secondary trading volume in every year 5-yr Benchmark Bond s Higher Turnover Ratio : Even with higher outstanding size, turnover ratio is still more than 2 times Unit: % Share of Market Trading Volume 7% 9 27% 2% 28% 2% 29% 21% 26% Unit: Times LB133A 1.5 LB155A LB176A LB133A LB196A LB15DA LB145B LB196A FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 Top 1 GOVT Bond Series : Accounted for 9% of all GOVT bond trading volume in secondary market Unit: % Share of Secondary Trading Volume 75% 76% 77% 8% 84% 9% 9% 92% FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 Well-Developed Benchmark Bond Pays Off : Even with greater size of issuance, the cost of funding is still at market rate Unit: USD Bil bps bps bps +3.2 bps bps -.2 bps bps FY8 FY9 FY1 FY11 FY12 FY13 FY14 To be Updated

31 Linking CGIF & BAHT BOND to the Development of Bond Market 2,85 THB Mil. CGIF Inaugural (Noble, Hong Kong) Total Outstanding 9,69,526 THB Mil. End of June 215 Baht Bond (Foreign Issuers Bond) CGIF (For Asian Bond Market Initiative) 1%.3% BAHT BOND Updated: In June 215, Ministry of Finance Lao PDR issued 12, THB Mil. of 3-year, 5-year and 1-year baht bonds, with 3.56%, 4.32% and 5.% of interest rate, respectively. 85,574 THB Mil. Corp Bond 23% SOEs Bond 8% IBRD Natural Hedging Inv t Grade BOT Bond 3% CABEI KEXIM (3,7 MB) Lao PDR (21,59 MB) 2 Targeted Industry GOVT Bond 38% ING (1, MB) ADB (1,5 MB) Citi IBK (11,553 MB) (12,3 MB) Hana (18, MB) Woori (13, MB) Why now? THE Entering OUTSTANDING ASEAN Economic Community BAHT (AEC) BOND Classified by issuers based on TTM What next? Broadening Issuer Base : CLMV (Cambodia, Lao PDR, Myanmar and Vietnam) 91,374 THB Mil. Laotian Issuers : 1/3 of Baht Bond Outstanding (as of June 215) (PDDF.) Becoming bond market leader of the region Baht Bond Outstanding (as of June 215) 85,574 THB Mil. IFIs 1% (1, THB Mil.) THB Mil. 3, 2, 26% (22,49) NOBLE AFD CBA Others 23% (19,984 THB mil.) Laotian Issuers 33% (28,9 THB Mil.) Korean Issuers 43% (36,5 THB mil.) Hana 1, 12% (1,1) ING CABEI 12% (1,66) 12% (1,) 9% (8,) KEXIM CA-CIB 7% KEXIM 7% KEXIM 7% (6,33) (5,668) KEXIM (5,71) KEXIM Woori Woori Hana CITI Woori CABEI 3% 3% Woori KEXIM 2% (2,8) (3,) IBK CABEI Lao PDR EDL-Gen (1,5) Lao PDR Lao PDR EDL-Gen Lao PDR Lao PDR Lao PDR Lao PDR KEXIM EDL-Gen ADB KEXIM Year Korean Issuers IFIs Others Laotian Issuers Source : PDMO (as of June, 215) 29

32 WK1 WK2 WK3 WK4 WK5 WK6 WK7 WK8 WK9 WK1 WK11 WK12 WK13 WK14 WK15 WK16 WK17 WK18 WK19 WK2 WK21 WK22 WK23 WK24 WK25 Annual Capital Flow classified by GOVT & BOT Bond (27 215) -53,42 THB Mil. (215YTD) THB Mil. 35, 3, 25, 2, 15, +84,3 +93,249-53,42 THB Mil. +23,52 1, 5, -5, -1, -22,494-27,157 +3,216-1,598-2,793-7, , , , ,738-1,56 29,642-53,87 GOVT Bond -29,783 THB Mil. BOT Bond -23,259 THB Mil. -15, Non-resident Net Buy/Sell in BOT Bond Non-resident Net Buy/Sell in GOVT Bond 215 Weekly (The past 25 weeks) THB Mil. 215 YTD Net Change in Non-resident Holding (YTD) BOT Bond vs GOVT Bond As of 26 th Jun, 215 As o 6, 45, 3, Accumulative NR Holding GOVT Bond VS BOT Bond (Since 1 Jan 26 Jun 215) T 15, -15, BOT Bond -23,259 THB Mil. (26 th Jun 215) -3, -45, -53,42 THB Mil. GOVT Bond -29,783 THB Mil. (26 th Jun 215) -6, 3 As of 26 th Jun, 215

33 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun- Jun Outstanding Non-Resident Holding in THB Bond = 63,34 THB Mil. 6.56% of Bond Market Cap. Thai Bond Market Cap. =9,69,526 THB Mil. Baht Bond (Foreign Issuers Bond) Corp Bond SOEs Bond BOT Bond 1% (For Asian Bond.3% CGIF Market Initiative) 23% 8% 3% Issuer Non-Resident Holding (THB Million) % Share of Thai Bond Market Cap. (9,22,573 THB Million) GOVT Bond 574,63 595,7 6.24% 6.2% 1.39% BOT Bond 118,177 33, %.35% 1.28 SOE Bond -.% -.1 Corp Bond % TOTAL 63,34 692, % 7.53% GOVT Bond Outstanding 3,613,545 THB Mil. Non-Resident 595,7THB Mil. BOT Bond Outstanding 2,914,883 THB Mil. Non-Resident 33,722 THB Mil. 2,914,883 THB Mil. GOVT Bond 38% 3,613,545 THB Mil. Domestic Investors 3,17,845 THB Mil. 83.5% Domestic Investors 2,881,161 THB Mil. 98.8% As of 26 th Jun, 215 Peers Comparison Non-Resident Holding in Thai GOVT Bond is 595,7 THB Mil. or 16.5% of Total GOVT Bond Outstanding 4% Percentage share of Non-resident Holding in Local Government Bond (Mar 28 - Present) Indonesia 38.13% Mar 15 3% Malaysia 31.85% Dec 14 2% 19.1% (Apr 13) Thailand 16.5% As of 26 th Jun,15 1% Japan 8.85% Sep 14 Korea 1.59% Dec 14 % Source : AsianBondsOnline, ThaiBMA As of 26 th Jun,

34 32 Vision Professional in public debt management for sustainable development Values Transparency, Discipline, Trustworthiness, Driving Social and Economic Development Mission Formulate sound public debt management policies and strategies as well as conduct, monitor and evaluate public debt management operations under the relevant legal framework and guidelines 3 PDMO s Strategies Pro-active Debt Management Foster Strong and Effective Organization Develop Domestic Bond Market to be a Sustainable Source of Funding for the Stability of Thailand s Financial System Source: Public Sector Development Group, PDMO

35 Bond Market Advisor Director-General Ace Viboolcharern Acting Public Debt Advisor Deputy Director-General Deputy Director-General Ace Viboolcharern Theeraj Athanavanich Debt Management Bureau 1 Wisut Chanmanee Executive Director Debt Management Bureau 2 Teeralak Sangsnit Executive Director Policy and Planning Bureau Sunee Eksomtramate Executive Director Bond Market Development Bureau Pimpen Ladpli Acting Executive Director Public Infrastructure Project Financing Bureau Anchana Wongsawang Acting Executive Director Public Infrastructure Project Management and Evaluation Bureau Jindarat Viriyataveekul Executive Director Bond Market Development Pimpen Ladpli, Senior Expert Government Bond Market Development Division Fund Management and Bond Market Infrastructure Development Division International Bond Market Policy Division Nattakarn Boonsri, Director Paroche Hutachareon, Director Nakarin Prompat, Acting Director Economist Economist Senior Economist Senior Economist Economist Economist Phimonphan Tanwattana Sittan Sathianphattanakool Siree Jongdee Chakrit Phothisuk Puttipong Kanna Chotika Uesampantakit Economist Economist Wanthanee Phongam Phacharaporn Khotnarin Public Debt Advisor Wisut Chanmanee Acting Bond Market Advisor Internal Audit Group Public Sector Development Group Legal Advisory Group Information Technology Center Payment Administration Bureau Sirasa Kanpittaya Executive Director Office of the Secretary Ekaraj Khuankhunsathid Secretary Front Office Middle Office Back Office Support Office Financial Product Development Division Sophida Sritomya, Director Economist Economist Pothirat Kijsriopak Chanikarn Chaiyasena

36 For Further Information : Pimpen Ladpli pimpen@pdmo.go.th Senior Expert on Bond Market Development Acting Executive Director of Bond Market Development Bureau Nattakarn Boonsri nattakarn@pdmo.go.th Director of Government Bond Market Development Division Sophida Sritomya sophida@pdmo.go.th Director of Financial Product Development Division Paroche Hutachareon paroche@pdmo.go.th Director of Fund Management and Bond Market Infrastructure Development Division Nakarin Prompat nakarin@pdmo.go.th Acting Director of International Bond Market Policy Division