Laos hires for international US$ bond debut

SINGAPORE, Nov 20 (IFR) - The Lao People's Democratic Republic has mandated Credit Suisse, JP Morgan and Standard Chartered for its planned international US dollar bond debut, according to market sources.

Laos previously sold US$182m of dollar bonds in two tranches in December 2015 to institutional investors in Thailand, and regularly sells sovereign bonds denominated in Thai baht, but it has yet to offer a bond to international investors.

"China and Thailand are two of Laos's biggest funding sources but people in Thailand are getting a bit full with the credit and it may need to look elsewhere," said a source.

It has yet to be decided whether the deal will come this year or next year, and the sovereign would first need to obtain international ratings.

Laos does not have ratings with any of the three international rating agencies yet, but Thai rating agency Tris Ratings on June 28 demoted the country’s BBB+ grade by one notch to BBB with a stable outlook on rising concerns over falling foreign exchange reserves and a growing debt servicing burden.

The International Monetary Fund wrote in August that Laos needed to follow through on planned public financial management reforms to strengthen its debt sustainability.

GDP growth slowed to 6.3% in 2018 from 6.8% the previous year, due partly to natural disasters that impacted agricultural and industrial production, but the IMF forecasts economic growth to rise to close to 7% in the medium term.

(Reporting by Daniel Stanton and Kit Yin Boey; Editing by Vincent Baby)

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