The value of long-term Thai corporate bonds rose 1.6% year-on-year to 270 billion baht in the first quarter of 2023, following a continued recovery of the economy, according to a Thai Bond Market Association (Thai BMA) release on Wednesday.
Managing director Somjin Sornpaisarn said the outstanding value of the Thai bond market totalled 16 trillion baht in the first three months, up marginally by 2% from 15.8 trillion at the end of 2022.
The expansion was mainly attributed to government and corporate bonds, which accounted for 50% and 29% of the total market, respectively.
Following the banking turmoil in the US and Europe, foreign investors' net purchases last month amounted to 16.6 billion baht.
At the end of the first quarter, foreign investors' holding of Thai bonds totalled 1.05 trillion baht.
"Thailand's financial markets are well-equipped for the government and private sectors to utilise the funds, considering the sturdy pillars of each financial segment," said Mr Somjin.
According to data compiled by the Thai BMA, the value of the equity market and bank loans totalled 20 trillion baht and 18 trillion, respectively, in the first quarter of 2023, constituting 36.6% and 33.8% of the total financial market.
The Thai BMA expects corporate bond issuance to exceed 1 trillion baht in value this year as companies are preparing to lock in financial costs, which are still below bank loan interest rates, amidst growth in business activities, said the association.
As of March, the energy sector has the highest outstanding value of long-term bonds at 871 billion baht, followed by the property sector at 520 billion and financial sector at 469 billion.
According to a Thai BMA survey, the Federal Reserve is expected to raise the policy rate one more time.
In line with the policy rates of the US and Thai central banks, the survey found the expected 5-year and 10-year Thai bond yields will increase by about 20 basis points for the remainder of this year.
"The Thai market does not expect the Bank of Thailand to tighten the rate at a fast pace like the Fed," said Mr Somjin.
By the end of this year, the 5-year bond yield is expected to increase to 2.18%, with the 10-year yield moving up to 2.61%, he said.