Some 890 billion baht worth of long-term corporate bonds are due for redemption this year, nearly all investment-grade bonds, with 73 billion baht holding maturity dates this month, says the Thai Bond Market Association (ThaiBMA).
President Somjin Sornpaisarn said the ThaiBMA expects Thai private companies to issue long-term bonds worth roughly 1 trillion baht this year, consisting of 450 billion worth of newly issued bonds, with about 550 billion rolled over.
In 2023, private companies issued long-term bonds worth more than 1 trillion baht, with the bond market value expanding 5.4%.
Foreign investors sold 150 billion baht of Thai bonds last year, but were expected to return to a net buy position in the fourth quarter after the US Federal Reserve signalled the end of its interest rate hikes.
As of December, the Thai bond market had total outstanding value of 16.5 trillion baht, with the highest value in the sectors of finance and securities, energy, real estate and banking, respectively.
In the past year, 0.8% or 16.4 billion baht of total outstanding value defaulted, comprising issues by All Inspire, Cho Thavee and JKN Global Group.
This year, non-listed Phi Phi Holiday Co Ltd defaulted on the payment of its bonds worth 392 million baht.
Italian-Thai Development (ITD) intends to postpone payment on bonds worth 14.4 billion baht, meaning the company does not consider it a default.
The contractor plans to seek bondholders' approval on Jan 17 to postpone the redemption for two years.
Ariya Tiranaprakit, deputy managing director of ThaiBMA, warned investors to be cautious when investing in high-yield bonds, studying information about the issuers to ensure they have sound business operations, low debt to equity and are backed by collateral assets.
"After ITD announced the postponement of bond redemption, including 2 billion baht due this month, it affected the bond market somewhat, especially high-yield bonds. But for investment-grade bonds, there was less impact," said Mr Somjin.
For the 890 billion baht worth of bonds due for redemption this year, they are mostly in the property sector (157 billion baht), followed by finance (153 billion) and energy (127 billion).
A ThaiBMA survey of interest rate predictions found most market participants expect the policy interest rate to remain at the current level of 2.50% in the first half of the year.
Respondents expect the Monetary Policy Committee to adjust the rate in the second half 1-2 times, lowering it by no more than 0.5%.
As of December, the two-year Thai bond yield increased 71 basis points (bps) from the previous year to 2.34%, while the 10-year Thai bond yield rose 6 bps to 2.70% and the five-year bond yield gained 21-40 bps.
In 2023, foreign investors posted cumulative net sales of 150 billion baht and had total outstanding Thai bonds worth 940 billion baht, accounting for 5.7% of Thai bonds' outstanding value.
The average remaining holding period is 8.4 years, up from 8 years at the end of 2022.