Thai bond valuations soared by 5.8% to 16.7 trillion baht in the first nine months this year, with government and corporate bonds being the main drivers of the increase, according to the Thai Bond Market Association (ThaiBMA).
Corporate debentures worth 825 billion baht were issued from January to September.
Bonds with high credit ratings were the most popular debt instrument, though some issuers postponed issuance to wait for suitable timing and interest rate costs.
Bond valuation is a method used to calculate the present value of the expected future returns, earnings, or cash flow from a bond investment.
Foreign funds continued to exit Thai debt instruments for three consecutive quarters, resulting in cumulative net sales of about 150 billion baht.
Foreign investors' holdings of Thai debt instruments at the end of the third quarter tallied 940 billion baht, accounting for 5.6% of the Thai bond market's outstanding value.
The yield curve rose for every type of government bond. Corporate bond yield curves with five-year maturities of all credit ratings rose by 64-87 basis points at the end of September.
There was a relatively large increase in short-term bond yields, following the five hikes in Thailand's policy interest rate this year and the announcement of plans to issue government bonds in fiscal 2024.
Uncertainty regarding several of the government's economic stimulus measures led bond yields to rapidly soar in September, with two-year bonds rising 90 basis points from the end of 2022 to 2.54% and 10-year bonds gaining 54 basis points to 3.18% at the end of the third quarter.
Ariya Tiranaprakit, executive vice-president of ThaiBMA, anticipates corporate bond issuance will reach 1 trillion baht this year, higher than the average rate of issuance over the past seven years (2016-2022) of 950 billion baht.
A survey regarding interest rate trends for the remainder of this year found the majority of respondents expect the Monetary Policy Committee to maintain rates at 2.5% at its final meeting this year in November.
Respondents projected the bond yield for the five-year tranche to increase by 10-15 basis points to 2.94% and 10-year bonds to reach 3.29% in the fourth quarter this year, based on the direction of US interest rate policy as well as supply and demand in the Thai bond market.