PDMO preps secondary debt market
Government savings bonds focus of trade
The Public Debt Management Office (PDMO) is preparing to create a secondary market for the trade of government savings bonds next year to facilitate investors' transactions in these debt securities.
Some investors want to offload their holdings of government savings bonds before the redemption period, said Patricia Mongkhonvanit, PDMO's director-general.
This can be done by selling government savings bonds to financial institutions that distribute these bonds, said Mrs Patricia.
Banks will calculate their purchase price at a discounted rate, which is quite high.
Banks will then retain these bonds as they cannot be resold to the general public.
To generate liquidity for investors who are holders of government savings bonds and want to quickly turn them into cash, PDMO is planning to launch a secondary market to trade government savings bonds.
The secondary market for trading government savings bonds is expected to launch around July 2021, said Mrs Patricia.
PDMO will have to set up market regulations to ensure fairness for the transaction of government savings bonds in the secondary market, she said.
Initially banks will be a designated channel for the transaction of government savings bonds in the secondary market.
In the future, PDMO envisions a peer-to-peer transaction of government savings bonds in the secondary market, but certain investment and tax laws will have to be amended.
The secondary market will benefit those investing in this type of debt securities by generating liquidity, while the selling prices will be in line with market mechanisms, said Mrs Patricia.
The outstanding value of government savings bonds currently totals 345 billion baht, with around 100,000 investors holding these debt securities, according to PDMO.