Overzealous forex trading against the baht cost one investment bank a $150 million yankee bond mandate. Or so the rumours had it. Happily for JP Morgan, the rumours turned out to be false, but they served to concentrate the minds of banks and trading houses that dared to mess with the Bank of Thailand as it fought to protect its currency. Although it finally caved in on July 2 and floated the baht, the central bank was determined not to let speculators get the upper hand: along with the conventional armoury, it employed a few arm-twisting techniques.
JP Morgan insists it remains lead manager for Bank of Ayudhya's yankee, now postponed pending improved market conditions. A Bank of Ayudhya official confirmed this. Nevertheless, gossip persists about how the issuer was leant on by the Bank of Thailand to drop the out-of-favour investment bank. "The client is perfectly happy. It is some malicious rumour spread about by our competitors and there is no question we still have the mandate," says JP Morgan vice-president Tira Wannamethee.
Bangkok mythology has it that there is a central bank black-list of less-than-popular banks that also includes Nomura and Crédit Lyonnais.