Thailand's 10-year government bonds headed for the fourth weekly rally as foreigners increased holdings after the country's debt management agency said it will reduce issuance this quarter. The baht was steady.
Global funds purchased US$225 million more of notes than they sold this week through Thursday, according to Thai Bond Market Association data.
In China, Thailand's biggest export market, the non-manufacturing purchasing managers' index rose to a six-month high of 55.4 last month, data showed yesterday. Shipments from the Southeast Asian country climbed in August, snapping three months of declines, official figures show.
"Less supply provides underlying support for Thai sovereigns," said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. "The bottoming-out of China's economy is providing a floor for the baht as China is an important market for Thai exports. The view on the baht is supportive of their bonds."
The yield on the 3.625% notes due June 2023 dropped eight basis points from a week ago to 3.852% as of 9.51am in Bangkok, according to data compiled by Bloomberg. The rate, which was steady on Friday, reached 3.85% on Oct 2, the lowest level since July 23.
Thailand plans to issue 78 billion baht ($2.5 billion) of benchmark securities in the last three months of 2013, down 20% from the previous quarter, and has no auction set for October, according to data posted on the Public Debt Management Office website on Sept 24.
HSBC Global
HSBC Global Asset Management's Hong Kong-based investment director Gordon Rodrigues said in an interview this week that he is positive on Thai notes in the short term. Ng Kheng Siang, Singapore-based head of Asia-Pacific fixed income at State Street Global Advisors, said in a separate interview he plans to boost holdings should yields rise.
The baht was little changed from Sept 27 and declined 0.1% on Friday to 31.31 per dollar, data compiled by Bloomberg show. One-month implied volatility, a measure of expected swings in the exchange rate used to price options, dropped nine basis points from a week ago to 7.42%. The gauge rose four basis points, or 0.04 percentage point, on Friday.
Thailand's exports rose 3.9% in August from a year earlier after a decline of 1.5% the previous month, a customs report showed on Sept 26. China accounted for 11% of goods shipped in the first eight months of 2013.