According to Jindarat Viriyathavikul, Director-General of the Public Debt Management Office (PDMO), the bonds are an initiative of the Finance Ministry meant to encourage Thais to build long-term savings through government bonds.
The offering comprises three-year bonds with a fixed annual interest rate of 1.80% and 10-year bonds with a fixed annual interest rate of 2.80%. Interest is paid every three months, reports the Bangkok Post.
The bonds are available through two distribution channels, including PDMO Wallet on the Paotang app operated by Krungthai Bank, with an allocation of B2bn. Purchases can be made from 8.30am on July 31 until Aug 31, or until the allocation is fully subscribed, on a first-come, first-served basis.
Each bond is priced at B1 per unit, with a minimum purchase of 100 units (B100) and a maximum investment of B3 million per transaction. There is no limit on the number of transactions, but the total investment per investor is capped at B50mn.
Purchasers must be Thais aged 15 or older. Those under 20 must obtain consent from a parent or legal guardian.
The second distribution channel is the Bond Connect platform. Investors must have a securities trading account with a participating securities company. A total of 24 securities firms are participating in the offering, while subscriptions can also be made through six participating banks.
Orders must be placed via the streaming application during the subscription period of Aug 3-5. The allocation for this channel is B2bn, with the same bond maturities and interest rates as those offered through the Paotang app.
Unlike the first-come, first-served method, subscriptions through Bond Connect use a “small lot first” allocation method, ensuring all eligible subscribers receive at least some allocation.
The minimum subscription is B1,000 (one unit). There is no maximum investment limit and no limit on the number of subscription orders. Investors are scheduled to be informed of their final allocation on Aug 6.
Buyers must be Thais, while minimum age requirements are determined by each participating securities company. Savings Plus bonds purchased through this channel may also be used as collateral for securities trading.
Ms Jindarat said the bonds are intended to encourage Thais to build long-term savings through secure government bonds. Around 150,000 individual investors hold government savings bonds, with about half of them 60 or older.
Interest earned on the bonds is subject to a 15% withholding tax. However, even after tax the net return remains higher than the interest offered on bank deposits.
This is the first issuance to be conducted entirely through a digital platform. The bonds are scripless, meaning no physical bond certificates or bond passbooks are issued.
The next issuance of Savings Plus bonds totalling 4 billion baht is scheduled for Sept 4, with interest rates to be announced in mid-August.