The Thai bond market had a total outstanding value of 17 trillion baht in the first half of 2024, up 2.7% from the end of last year, according to the Thai Bond Market Association (ThaiBMA).
Of the total, 494 billion baht were long-term corporate bonds, most of which were investment-grade bonds, while 5% were high-yield bonds. The proportion of guaranteed bonds was as high as 81% of total issuance in the first half, up from 48% last year, with an average issuance period of 2.2 years, down from 2.5 years in 2023.
The government bond yield curve at the end of the second quarter was relatively stable from the end of 2023, in line with the policy interest rate remaining at 2.50% since the Bank of Thailand's Monetary Policy Committee (MPC) meeting last September, said ThaiBMA president Somjin Sornpaisarn.
The 2-year and 5-year bond yields increased slightly by 1 and 2 basis points (bps), while the 10-year bond yield decreased by 2 bps from the end of 2023 to 2.35%, 2.47% and 2.68% at the end of the second quarter of 2024, respectively.
The association forecasts the 5-year and 10-year bond yields will decline slightly this year to 2.47% and 2.73%, respectively.
"The main factor affecting bond yields in the future is the interest rate direction of leading economies and their economic expansion," said Mr Somjin.
A survey of bond traders found they expect the local policy interest rate to remain at 2.50% this year, with 43% expecting the MPC to cut rates at its last meeting in December.
In the first half, cumulative net sales of Thai debt instruments totalled 66.5 billion baht, partly attributed to the Federal Reserve maintaining its policy rate at a high level for longer than expected.
As Indian government bonds are being included in the calculation of the JP Morgan Emerging Market Bond Index (GBI-EM), the proportion of Thai bonds in the index is expected to decrease.
At the end of the second quarter, foreign investors held Thai debt instruments worth 870 billion baht, accounting for 5.1% of the total market outstanding value. The remaining maturity of Thai debt instruments held by foreigners averages 9 years, up from 8.6 years at the end of 2023.