Long term investors in Thailand are set to benefit from their association from the Kingdom, according to one ratings agency in a statement released on Thursday of this week.
Infrastructure investment in water, power, transport and telecommunications in the Greater Mekong region including Thailand should increase substantially over the next several years – offering long-term investors, such as insurance companies and pension funds, opportunities for yield enhancement and diversification, said Fitch Ratings (Thailand) Limited at its semi-annual investor briefing in Bangkok.
There have been only limited issuances of bonds for alternative assets such as property and infrastructure projects in Thailand to date.
Fitch said that it expects Thailand’s bond markets to continue to develop with the issuance of real estate investment trusts (REITs) and infrastructure bonds, as well as a broader range of entities accessing capital market funding in the longer term.
Infrastructure can be particularly attractive to life insurers, with limited long-tenor assets to match their long-tail liabilities and are well protected against inflation and less correlated with the financial market cycle. Some of the challenges for insurers, however, include possible higher risk charges and their lack of experience with infrastructure investment.
Fitch’s Senior Analysts also discussed the agency’s approach and key rating factors in assessing infrastructure projects with the more than 50 executives and officials from the regulatory, investor, financial and corporate sectors at its semi-annual investor briefing.
Fitch’s key rating factors include the project’s rationale, sponsors, legal structure, completion process, technology, operational and maintenance risk, as well as the risk to the project’s gross revenue due to price, volume and availability.
Helen Han, Head of International Financial Corporation’s Bangkok Office, was the guest speaker at Fitch’s event – where she discussed the IFC’s support for infrastructure development in East Asia-Pacific region.
