Thailand’s Bond Resurgence: Global Investors Make a Comeback

People from other countries are buying Thai bond again, which is good for the country’s business. Yields hit their best level in nine years after a bit of a drop. Now, global funds are showing their strength by putting 11.5 billion baht (about S$434 million) into Thai bonds just in October. The most money has come in since March, and it looks like buyers are loving the high yields.

Good news for the new government

The world’s money has come back just at the right time for Thailand’s new government. They are spending a lot of money by giving out stimulus packages and a big 560 billion baht cash handout. When Prime Minister Srettha Thavisin took office on September 5, the yields on 10-year Thai bonds went up by more than 50 points. It’s nice to know that foreign funds love each other.

Rate Peaks and a Rise in Yields in Bond Gains

A betting game is also going on among investors about how the central bank will change rates. There is more and more support for the idea that the Bank of Thailand may have reached its highest rate. This makes people even more optimistic about bond gains. The government might get lucky and make some money on their bonds if this works out.

Situation for Demand Around the World

A few things need to happen in order for the global investment love affair to really get going. A clear picture of the digital wallet measure (the cash-giving programme) and some security in US yields are things that people would like to see. Poon Panichpibool from Krung Thai Bank says that Thai bond could get even more attention if the government cuts back on aid to 400 billion baht or less.

Plans for the economy and populist measures

Thailand’s new government is doing some populist things, like giving out cash (called the “digital wallet measure”), raising the minimum wage, lowering the prices of diesel and power at the pump, and stopping farmers from owing money. Deputy Finance Minister Julapun Amornvivat even said there was a chance that the rich might not get any of the cash.

Good Signs for the Bond Market

The most recent auction of a 15-year sustainability note had the best bid-to-cover ratio in almost a year. This is a sign that the relationship is getting serious. A 2029 bond sale this week also got a lot of attention because it had the most press since it first came out in July.

Bond Gains to plans for borrowing money and lowering risks

Looking ahead, Thailand wants to borrow 8% more for the new fiscal year, which starts on October 1. In order to keep buyers calm, the debt management office is taking steps. For example, the sales of long-term bond (those with 10 years or more) have been cut from 54% of all bonds issued to 48%.

Less danger from U.S. rate hikes

Thai bonds seem less likely to be affected by rate hikes in Thailand, which is another plus for bond buyers. Yesterday, the governor of the Bank of Thailand gave a hint: after a 200-basis-point rise since August of last year, it’s time to press stop. Investors and the government are both happy about the Thai bond market, which makes them do a little happy dance.