Thailand to Stop Issuing THBFIX Loans, Debt from July 2021

All financial institutions will stop offering new loans and debt securities which reference THBFIX from 1 July 2021, Bank of Thailand says.

BOT (Bank of Thailand) has announced that financial institutions will cease issuance of new THBFIX-linked financial products from 1 July 2021 onwards.

The central bank has previously said THBFIX – which utilises LIBOR in its calculation – will be discontinued, as part of Thailand’s transition to a new interest rate benchmark, THOR.

The BOT said on Tuesday (17 November) that it has agreed with the Steering Committee on Commercial Banks’ Preparedness for LIBOR Cessation that, starting from 1 July 2021 onwards, all financial institutions will stop offering new loans and debt securities (including structured notes) which reference THBFIX.

“This is to limit the amount of THBFIX exposure, thereby reducing risks associated with the LIBOR transition,” the central bank said.

From 1 July 2021, new financial products may reference THOR, which the Committee and the BOT have together developed as an alternative reference rate for THBFIX.

When THBFIX is discontinued, the BOT will publish ‘Fallback THBFIX’, a collateral-based rate which will be used for legacy contracts temporarily ahead of full THOR adoption.

Fallback THBFIX is expected to be published only until end-2024.

“Market participants must expedite their preparatory works including contract amendments, and any necessary system and operational changes required to accommodate the usage of Fallback THBFIX,” BOT said.

“The BOT fully supports the industry’s preparation, especially on communications with clients as well as fair and transparent contract amendments, to ensure that participants are ready for the transition well ahead of the eventual cessation of LIBOR and THBFIX next year.”

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