In the first half of 2024, the Thai bond market recorded a total outstanding value of 17 trillion baht, showcasing a 2.7% increase from the previous year-end, according to the Thai Bond Market Association (ThaiBMA).
Within the total value, 494 billion baht comprised long-term corporate bonds, predominantly consisting of investment-grade bonds, while 5% were categorized as high-yield bonds. Notably, guaranteed bonds represented a significant portion, accounting for 81% of the total issuance in the first half, a notable rise from 48% in the preceding year. The average issuance period for bonds stood at 2.2 years, showcasing a slight decrease from 2.5 years in 2023.
ThaiBMA President Somjin Sornpaisarn highlighted the stability of the government bond yield curve by the end of the second quarter compared to the close of 2023, aligning with the consistent policy interest rate of 2.50% following the Bank of Thailand’s Monetary Policy Committee (MPC) meeting last September.
Minor fluctuations were observed in the 2-year and 5-year bond yields, with a slight increase of 1 and 2 basis points (bps) respectively, while the 10-year bond yield showcased a decrease of 2 bps from the previous year-end, settling at 2.35%, 2.47%, and 2.68% by the end of the second quarter in 2024.
Projections indicate a slight decline in the 5-year and 10-year bond yields for the current year to 2.47% and 2.73% respectively, with the future bond yields expected to be influenced by global economic factors like the interest rate policies of leading economies and their economic growth prospects.
Anticipating a consistent policy rate of 2.50% throughout the year, bond traders also foresee the possibility of a rate cut by the MPC at its final meeting in December, as indicated by a survey.
Factors such as the inclusion of Indian government bonds in the calculation of the JP Morgan Emerging Market Bond Index (GBI-EM) are projected to impact the proportional representation of Thai bonds in the index moving forward.
By the close of the second quarter, foreign investors held Thai debt instruments valued at 870 billion baht, making up 5.1% of the total market outstanding value. The average remaining maturity of Thai debt instruments among foreign investors saw a slight increase to 9 years, up from 8.6 years at the end of 2023.
