Moody's affirms Thai bond rating

Moody's affirms Thai bond rating

SINGAPORE — Moody's Investors Service has affirmed Thailand's government bond rating at Baa1 with a stable outlook.

It also affirmed Thailand's short-term Prime-2 debt rating, the (P)Baa1 MTN/Shelf issuance rating, and the Baa1 Japan Bonds/Thai Bonds issuance rating.

An employee counts banknotes at a cash register while processing a customer's payment inside a 7-Eleven convenience store on Wednesday. (Photo by Bloomberg)

Thailand's credit fundamentals have "withstood the political turbulence in the country since the September 2006 coup", said the ratings agency in the statement released today.

The stable outlook reflects the expectation that the political turmoil will not undermine Thailand's credit strengths to a material degree.

It lists among the key strengths favourable government debt structure, prudent monetary and macroeconomic policy as well as fiscal management.

The country's current account turned into a small deficit in 2012, which almost doubled to $2.8 billion in 2013 (0.7% of estimated GDP). Moody's expects small and manageable current account deficits of below 1% of GDP in 2014 and 2015.

"Moody's does not expect the recent political developments to have a significant impact on Thailand's medium-term growth outlook, which remains favourable when compared to similar-rated peers," it said.

While anti-government protests will keep real GDP growth in 2014 at around 3%, assuming a return to normalcy in the second half, the rating agency sees growth picking up again from 2015 onwards to average 4.5% through to 2018 from 2014. This compares to projected average median growth rates of 3.7% for the Baa-rated peer group and 3.4% for A-rated peers.

However, it warns a prolonged political deadlock into the second half of 2014 will affect a negative outlook rating, as will the escalation or proliferation of the rallies. Other negative factors include a significant rise in government funding costs related to domestic political uncertainty or a lapse in fiscal discipline and a sharp deterioration of the balance of payments and significant loss of official international reserves.

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