Thailand Financial Institutions Development Fund Plans Private Bond Issue.

Aug. 2--Bonds issued by the Financial Institutions Development Fund to help refinance existing liabilities would be privately placed and non-marketable, according to Sommai Phasee, deputy finance permanent secretary.

Authorities plan to issue 320-billion-baht-worth of bonds in the fourth quarter, with a total of 774 billion baht issued over the next three years.

The Financial Institutions Development Fund has run up hundreds of billions of baht in liabilities over the past few years, mostly borrowing in the short-term money market, as a result of its assistance to ailing banks and finance companies during the crisis.

The government says by issuing longer-dated bonds, from six to 20 years, borrowing costs will be reduced.

In 1998, the government approved the issue of 500-billion-baht-worth of state bonds to offset losses of the Financial Institutions Development Fund from its assistance to ailing finance companies during the crisis.

Plans call for these bonds, which are traded in the Thai Bond Dealing Centre, to be continually rolled-over with new issues at maturity.

The new bond issues totalling 774 billion baht will be used to offset losses incurred from the development fund's assistance given to failed banks, such as Bangkok Metropolitan Bank, Siam City Bank, Union Bank and Laem Thong Bank.