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IFC Launches First Partial Credit Guarantee Facility in Thailand

Bangkok, Thailand, August 1, 2002 —The International Finance Corporation (IFC), TelecomAsia (TA), and its existing lenders signed agreements in Bangkok yesterday enabling TA to proceed with the launch of a partial credit guarantee by IFC.  This landmark bond issue is a first for the country.
The use of the guarantee by IFC is a significant step in its drive to contribute to the further development of the bond market, and thereby the broader capital markets, in Thailand.  “The partial guarantee will set benchmarks for larger corporate bond issues with longer maturities,” said Nina Shapiro, IFC Treasurer.  “Increasing issue size and maturity is one of the best ways to increase market liquidity, which is often constrained by inadequate supply of quality paper relative to demand.”
Under its agreement with TelecomAsia, IFC will provide partial credit guarantees of up to Baht 3.375 billion (approximately US$75 million) covering around 50 percent of the longest term tranches of TA’s upcoming bond issue as well as a subordinated loan of Baht 1.125 billion (or around $25 million).  The move is aimed at improving TA’s financial standing, while supporting market development in Thailand.  The new IFC-backed bonds will have maturities of more than eight years, versus the corporate bond standard of five.
TelecomAsia is a leading provider of telecommunications services in Thailand offering fixed line telephone and other related information and communication services.  With its modern fixed line network in the Bangkok Metropolitan Area, TA is positioned as a high quality provider of telecommunications services to residential customers as well as all segments of the business market.
“TA will be able to provide more and better information and communication services to Thai consumers and businesses because of the greater financial flexibility afforded by the long-term Baht financing,” noted Mohsen Khalil, Director of IFC’s Global Information and Communication Technologies Department.
“TelecomAsia provides important services to the people of Thailand, and the upcoming bond issue will make TA a stronger player in a competitive industry important to economic growth and welfare,” said Tim Ryan, IFC Country Manager for Thailand.  “Our objective here is not only to strengthen the bond market, but also to benefit the company and the country.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.  IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.  Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries.  IFC’s committed portfolio at the end of FY01 was $14.3 billion.