Allen & Overy pitches in on pioneer corporate bond offering in Asia

Allen & Overy (A&O) has pitched in on the first fully digitalised corporate bond offering made via digital wallet in Asia.

The firm guided Thailand’s national petroleum exploration and production company, PTT Exploration and Production Public Company Limited (PTTEP), as it established a medium-term note (MTN) programme. The programme included the public offering of THB6bn worth of digital bonds (about US$180m).

The bonds, which were granted an AAA credit rating by TRIS Rating, have a tenor of five years and include a step-up interest rate with a minimum of 2.00% per annum and a maximum of 2.75%, averaging 2.25% per annum, A&O said. This is the first public bond offering made by PTTEP in a decade.

The bonds were sold on the Pao Tang mobile app developed by Krungthai Bank Public Company Limited (Krungthai), which served as the sole lead arranger in the deal. The app is the largest electronic financial platform/digital wallet in Thailand.

“The issuance also marks the first time in the region that a corporate bond offered in the primary market has the ability to be traded anywhere and at any time into cash in the secondary market via a digital wallet,” A&O said.

The digital bonds were fully subscribed in eight minutes, signifying the significant demand. The firm explained that the transaction “paves the way for future issuances of digital corporate bonds in the Thai market.”

“This market-first issuance also represents an important step in making investments in top-rated corporate bonds accessible to all in Thailand, irrespective of socioeconomic status or level of income,” A&O Bangkok banking practice head Stephen Jaggs said. “We are delighted to have advised long-standing and valued client PTTEP on this prominent mandate, which will enhance efficiency and contribute to the digitalisation of the Thai debt and equity capital markets.”

Jaggs headed up A&O’s team on the deal. He was supported by counsel Doungporn Prasertsomsuk and associates Natthicha Wiriyatornphan and Pradchayada Maneeratanapron.

“Digital bonds are attracting growing interest globally from issuers and investors alike. PTTEP’s issuance sets a market precedent for other similar future transactions in the region. The issuance also signifies an important step in financial innovation in Thailand and in promoting financial inclusion for all,” Prasertsomsuk said.