Bangkok,, ThaiBMA revealed that in the first half of 2024, the Thai bond market expanded by 2.7% from the end of last year, mainly due to an increase in government bonds. In addition, the value of long-term corporate bonds was 494,371 million baht, accounting for 49% of the value of the whole of last year, with the majority being investment grade bonds. In addition, a survey of Thailand’s policy interest rate expectations from market participants mostly expected the MPC to maintain the policy interest rate at 2.50% in 2024, with 43% expecting a chance that the MPC will cut the policy interest rate in December, the last meeting of the year.
Dr. Somjin Sorpaisarn, Managing Director of the Thai Bond Market Association (ThaiBMA), announced the state of the Thai bond market in the second quarter of 2024. At the end of the second quarter, the Thai bond market had an outstanding value of 17 trillion baht, expanding by 2.7% from the end of the previous year, mainly due to an increase in debt instruments issued by t
he government. In terms of the issuance of long-term private debt instruments (long-term debentures), the value was 494,371 million baht, of which 95% was in the investment grade group, while the remaining 5% was in the high-yield group. It is noted that the issuance of this group was in the form of secured debentures, accounting for a high proportion of 81%. For the first half of 2024, it was up from 48% in 2023, and the average issuance period was 2.2 years, down from 2.5 years in 2023.
The Thai government bond yield curve at the end of Q2 2024 was relatively flat from the end of 2023, in line with the policy interest rate that remained at 2.50% since the MPC meeting in September 2023. The 2-year and 5-year bond yields increased slightly by 1 bps and 2 bps, while the 10-year bond yield decreased slightly by 2 bps from the end of 2023 to 2.35%, 2.47% and 2.68% at the end of Q2 2024, respectively.
The 5-year corporate bond yield curve in the first half of 2024 for AAA, AA and A bonds was relatively flat in
line with government bond yields. However, BBB+ and BBB bonds had yields that rose by around 24-32 bps from the end of 2023, reflecting higher credit spreads as investors became more cautious in investing in these bonds. At the end of Q2 2024, AAA, AA, A, BBB+ and BBB bonds had yields of 3.15%, 3.26%, 3.55%, 4.76% and 5.73%, respectively.
Foreign investment inflows (Fund flow) of foreign investors in the first half of 2024 were net sales of Thai debt instruments in both the first and second quarters, totaling a cumulative net sales value of Thai debt instruments of 66,514 million baht, partly due to the Fed maintaining the policy interest rate at a higher level for longer than expected, coupled with the fact that Indian government bonds were included in the calculation of the JP Morgan Emerging Markets Bond Index (GBI-EM), which will result in a decrease in the proportion of Thai debt instruments in the index. At the end of the second quarter of 2024, foreign investors held Thai debt instruments of 870 billi
on baht, accounting for 5.1% of the outstanding value of the Thai debt instrument market. The average remaining maturity of Thai debt instruments held by foreign investors was 9.0 years, up from 8.6 years at the end of 2023.
Dr. Somjin also mentioned the results of a survey of market participants regarding interest rate expectations in 2024, which found that most expected the MPC to maintain the policy rate at 2.50% in 2024, with 43% expecting a chance that the MPC would cut the policy rate in December, the last meeting of the year.
For the forecast of Thai bond yield, the respondents expect that in 2024, Thai bond yields of 5-year and 10-year maturities will move down slightly by an average of around
5 bps. in the second half of the year from the survey date to be at 2.47% and 2.73%, respectively, at the end of 2024. The main factors affecting future bond yields are the interest rate direction of leading economies and domestic economic growth.
At the same time, the Thai Bond Market Association (ThaiBMA)
has launched the Industry Financial Ratio and Financial ratio of issuers in the form of Percentile compared to the industry (Financial Ratios Comparing to Industry) on the ThaiBMA website to provide investors with important information to support their investment decisions, which is one of the three operational approaches of ThaiBMA under the support of the SEC to protect the interests of investors.
Source: Thai News Agency
