Bond market more stable but not yet recovered: BoT

Bond market more stable but not yet recovered: BoT

Bank of Thailand's Vachira Arromdee (Photo supplied)
Bank of Thailand's Vachira Arromdee (Photo supplied)

A Bank of Thailand (BoT) official said on Wednesday the country's bond market has stabilised more over the past month but has not completely recovered, after a period of volatility during the coronavirus pandemic.

"Investor confidence has returned ... but not quite normal yet," BoT Assistant Governor Vachira Arromdee told a news conference.

The central bank has set up a 400 billion baht corporate bond stabilisation fund to backstop the corporate debt market and reduce risk.

"The fund is a preemptive move to build investor confidence, Ms Vachira said. "It acts as a field hospital. If it's not used, that's good."

The fund, which is available from Wednesday, will provide bridge financing to firms registered and operating in Thailand with investment-grade bonds maturing during 2020-2021, excluding state companies, financial institutions and subsidiaries.

But firms must first secure other sources able to take up at least half of their bonds being rolled over before they seek support from the stabilisation fund.

The fund will buy bonds of up to 270 days and charge interest rates higher than the market plus a facility premium of about 1% to 2%, Ms Vachira said.

Krung Thai Asset Management is the manager of the fund, which will stop operations at the end of next year, unless it is used up before then.

Overall corporate bonds due to mature in May and June are worth about 200 billion baht, of which about 68% carries credit ratings of higher than "A-" and about 22% has ratings between "BBB+" and "BBB-", Ms Vachira said in a statement.

During May-December, debt worth about 670 billion baht will mature, she added. 

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