BOT to stop longer-term bond issue
The Bank of Thailand will next year cease issuing four-year, fixed-coupon bonds in anticipation of a surge in the supply of long-term bonds due to government's increased funding needs.
As excess liquidity in the system is projected barely to change, there is less need to expand the capacity to manage liquidity through longer-term bond issuance.
The central bank, in consultation with bond-market participants, plans to make further adjustments to its bond-issuance schedule in line with the changing market conditions and to facilitate bond-market development.
To augment the liquidity of floating-rate bonds (FRBs), BOT will increase the size of issues and use only one type – the three-year bond based on the three-month Bibor (Bangkok Interbank Offered Rate) – while two- and three-year FRBs linked to the three- and six-month Bibor will be discontinued.
This year, the BOT has adjusted bond issuance to accommodate market demand and boost liquidity in the secondary market. The adjustments were primarily a change of auction days for two- and three-year fixed-coupon bonds to avoid them maturing on the weekend and a reduction in frequency while increasing the size of issues.
