By ERICH PARPART
THE Thai Bond Market Association has seen an unprecedented wave of small and medium enterprises issuing bonds during the first quarter of this year.
This is a good sign for the development of the country’s bond market.
The Bt7.16 billion net outflow from the bond market in the first quarter is minimal compared to Bt23.15 billion in the same quarter last year, as more foreign investors are moving to long-term bonds as manifested by the Bt83 billion inflows to the long-term bond market during the same period.
Tada Phutthitada, president of ThaiBMA, said yesterday that 16 newcomers were among the short-term bond issuers in the first quarter, which is double that of last year, while total issuers also increased from 73 companies in 2014 to 115 in the first quarter of this year.
The value of short-term bonds issued in the first quarter plunged 48 per cent to Bt163.47 billion from Bt312.66 in the same quarter last year.
“The value of short-term bonds issued in the first quarter decreased by Bt149.12 billion while its types declined by 48 per cent, but the number of newcomers and the total number of companies has increased by 100 and 58 per cent.
“This reflects that more medium and small companies are seeking to raise funds in the bond market and the sizes will be smaller,” he said.
The number of private companies issuing long-term bonds with maturities greater than one year in the first quarter also increased from two in 2014 to five in 2015, while the types of bonds increased by 43 per cent, but the total value declined from Bt130.74 billion in the first quarter of 2014 to Bt82.41 billion in the same quarter this year.
That decrease in value was largely due to the unusually high value of bonds that were issued by large oil companies and CP All last year.
“Large corporations, which were the first to begin raising funds in the capital market after the hamburger crisis in 2008, have already used up the opportunity.
“The trend is now shifting to the medium and small enterprises that are beginning to copy them, as they realised the benefits from raising funds in the bond market,” he said.
The Finance Ministry still has a lot of cash left, about Bt700 billion as of September 2013, which could be used to buy back Thai debt to lower the outflow risk during the US rate hike period.
The US Federal Reserve still has “a lot of things to worry about” besides inflation and job numbers before raising rates, such lowered export competitiveness, which could harm the US’ economic recovery.
“The Fed had never mentioned exports until now,” he added.