BANGKOK, 14 July 2019 (NNT) - Let’s look at movements in the Thai bond market. In the first half of the year, a sell-off of bonds reached more than 500 billion baht, an increase of 34 percent on the same period last year. It is expected that this will be the first time in history that the sell-off has reached one trillion baht.
Mr. Thada Phreutthithada, president of the Thai Bond Market Association (ThaiBMA), disclosed today that the Thai bond market in the first half of the year could grow higher than 5.45 percent, with the total outstanding value increasing to 13.49 trillion baht from 12.79 trillion baht at the end of last year. The long-term private debt instruments have increased by 34 percent compared to the same period of last year. The top 10 major issuers have a value of more than 50 percent of the issuance value in the first half of 2019. It is expected that the issuance value will reach one trillion baht this year. The short-term private debt instrument issuing value has decreased by over 68 percent from the same period last year, which is a decrease in the issuance of promissory notes.
The trade war situation between China and the United States that still persists and the Federal Reserve’s tendency to cut the interest rate again during the second half the year, has made foreign investors turn to Thai bonds from May to June, resulting in net purchases by foreign investors in the first half of the year equal to 3.21 billion baht. The net cumulative investment value by foreigners in the first half of the year equals 989.02 billion or 7.3 percent of the total value of the Thai bond market.
In the second half of the year, it is expected that the baht appreciation and economic slowdown will lead to a policy rate cut at the end of this year or early next year. While the short-term government bond yield may fall from the bond auction amount cut by the Bank of Thailand to prevent a rise in money from foreign inflows. The long-term government bond yield rate should decrease from the inflation rate and the public and private investment that remains stable while waiting for clarity of the new government’s economic policy.