The Thai Bond Market Association (ThaiBMA) expects the value of corporate bonds to remain elevated this year as corporates look to lock in financial costs as interest rates rise.
Corporate bond issuance is projected to exceed 1 trillion baht in value this year after the market tallied 1.27 trillion baht in 2022, a record high for the third year in a row, said managing director Somjin Sornpaisarn.
ThaiBMA anticipates the Bank of Thailand's policy interest rate will increase to 2% this year, up from 1.25% now, while the US Federal Reserve's interest rate will peak at 5.5% by the end of the year, up from 4.25%.
"Thai corporate bond issuers want to lock in financial costs and prepare to support economic growth and business expansion. Last year, there were 30 new issuers from 15 business sectors raising funds from the bond market, of which 21% are long-term bond issuance," he said.
Last year, the value of environmental, social and governance bonds totalled 211 billion baht, bringing the outstanding value to 502 billion in 2022, an increase of more than 66% from the end of 2021.
There were active digital bond offerings on the Pao Tang application, with eight issuers issuing 29.1 billion baht worth of digital bonds.
Mr Somjin said the outstanding value of the Thai bond market was 15.8 trillion baht last year, an increase of 5.3% from 2021, supported by government debt securities and corporate bonds that grew at a rate of 14% and 9%, resulting in outstanding value of 7.77 trillion baht and 4.57 trillion baht, respectively.
Foreign investors were net buyers of 47 billion baht and their holdings of Thai bonds totalled 1.07 trillion baht, accounting for 6.8% of the outstanding value of the Thai market. The average remaining maturity of bonds held by foreign investors is 7.96 years.
The Thai government bond yield will rise for all age groups this year, in line with the rising US interest rates as the Fed continues to fight against high inflation, he said.
The Bank of Thailand's Monetary Policy Committee is expected to raise the policy rate 2-3 times this year to 1.75% to 2%, resulting in a slight increase of bond yields for 5-year and 10-year series by 20-30 basis points from levels in 2022, said Mr Somjin.