Bond and Debt Securities​

Debt security is a financial instrument representing a legally binding loan agreement between a creditor and a debtor, where a creditor is a buyer or an investor and a debtor is an issuer. In return for the loan, the buyer will receive interest or discount from the par value on a specified rate and time. Holders of debt securities are paid before shareholders in the event of the issuer's liquidation.
In general, the main features of debt securities include issuer name, par value, maturity date, coupon rate, coupon payment date, type of debt security and covenants.​​​​​​ต
 

The Bank of Thailand's responsibilities concerning government debt securities

To ensure the effective operations of bond and debt securities services, the Bank of Thailand has serveral important responsibilities as follows:
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    The Bank of Thailand's responsibilities concerning government debt securities

  • 1. Coordinating with the issuers in planning for new issuance of debt securities in the primary market. In addition, the Bank of Thailand issues the Bank of Thailand bonds used as monetary policy tools to stabilize liquidity and interest rate in financial market. Issuance of debt securities in the primary market also serves to enlarge investor base which helps enhance the development of financial and debt securities markets.
  • 2. Overseeing and managing issuance of government debt securities in the primary market.
  • 3. Serving as a registrar and paying agent.
  • 4. Appoiting primary dealers to be trading counterparties with the Bank of Thailand in undertaking monetary policy.
  • 5. Participating with the Ministry of Finance or other related government agencies in developing debt securities market such as developing issuance of new government debt securities in primary market, improving liquidity and efficiency of secondary market, and enhancing clearing and settlement infrastructure. ​​

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Participants in government securities market

 

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    Participants in government securities market

  • 1. Issuer: An entity that issues a financial instrument which represents a legal obligation between a creditor (buyer or investor) and a debtor (issuer). Issuers of government securities include the Ministry of Finance, the Bank of Thailand, Financial Institutions Development Fund, and state-owned enterprises.  
  • 2. Bondholder: An owner of government securities, including purchaser, transferee, and winning bidder. Bondholders can be individuals, juristic persons or financial institutions.
  • 3. Custodian / Depository: A financial institution that holds securities on behalf of bondholders for safekeeping. Some commercial banks serve as custodian, while Thailand Securities Depository Co., Ltd. (TSD) plays the role of central depository for scripless securities. 
  • 4. Issuing agent / Selling agent:  A financial institution appointed by the issuer to conduct the issuance / sale of debt securities under mutual agreement. The Bank of Thailand acts as an issuing agent of government securities, while some commercial banks and specialized financial institutions are authorized as selling agent. 
  • 5. National Interbank Transaction Management and Exchange Co.Ltd. (NITMX): A company jointly established by Thai commercial banks to process inter-bank payment transactions across member banks through electronic media both domestically and overseas.
  • 6. Entities accepting securities as collateral include Government agencies, financial institutions and individuals such as court, Metropolitan Electricity Authority, commercial banks, specialized financial institutions and individuals. Collateral can be used as bail to court, for electricity consumption, and for loan agreement.
  • 7. Registrar and Paying Agent: An entity in charge of keeping records and making payment of interest and principal to bondholders such as the Bank of Thailand.
  • 8. Government authority: Government agencies that are legally authorized to verify ownership of bond, or seize bond. These agencies are, for example, Revenue Department, court and Legal Execution Department. ​

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Introduction to Investment in Debt Securities​

สำหรับผู้สนใจเรื่องราวต่าง ๆ ที่เป็นพื้นฐานเกี่ยวกับตราสารหนี้ ​​​​และการลงทุนในตราสารหนี้ สามารถเรียนรู้เนื้อหาเบื้องต้น ได้จากหัวข้อที่เกี่ยวข้อง ดังนี้