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Thailand: EGAT paves the way : World Bank guarantees EGAT bonds (English)

The Electricity Generating Authority of Thailand (EGAT) is the country's national electricity generating and transmission company. It was formed in May 1969, as a state enterprise wholly-owned by the Kingdom. The currency crisis in Thailand has had an adverse impact on the financial health of the Thai electricity utilities. Before the crisis, EGAT's financial position was sound. Following the crisis (with the exchange rate going up from about Baht 25/US$ to more than Baht 50/US$ and thereafter stabilizing at around Baht 40/US$), EGAT suffered heavy foreign exchange losses. The Government adjusted the tariff from April 1, 1998 to offset partially the impact of devaluation. Consequently, there was a need to improve EGAT's financial position and to remove the serious constraints EGAT faced in meeting the financing requirements of its ongoing investment program. The financing gap was further aggravated by EGAT's inability to access long term financing in the capital markets because of perceived higher country risk, the Asian crisis and the collapse of the domestic debt market. The Government, in consultation with the Bank, decided that part of the financial resources required for EGAT should be mobilized from the capital markets and not just by continuing the Bank lending program. To meet EGAT's urgent funding need, a 10-year bond issue was structured with the World Bank covering the principal and a single coupon payment on a rolling basis. Originally, This Note describes the conditions of the World Bank guarantee and the benefits accruing to EGAT.




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Thailand: EGAT paves the way : World Bank guarantees EGAT bonds (English). Project finance and guarantees notes Washington, D.C. : World Bank Group.