Outstanding bonds expected to hit Bt8.88 tn in 2013: group
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Up to Bt200 bn in new issues in the pipeline in second half
Encouraged by first-half figures, the Thai Bond Market Association expects outstanding bonds to grow 3.4 per cent to Bt8.88 trillion this year from Bt8.58 trillion last year.
Thai BMA expects a rise of 20 per cent in average daily trading in the secondary market. Corporations would continue to issue Bt170 billion-Bt200 billion in bonds and debentures in the second half of this year.
Local bonds will continue to draw investors, while foreign capital outflows will slow down in the rest of this year for a positive change in net capital flow position, Niwat Kanjanaphoomin, president of the Thai BMA, said yesterday.
Long-term bonds increased for both government bonds, including state enterprise bonds, and corporate bonds and debentures. Long-term bonds increased 4.1 per cent from the preceding quarter and 5 per cent from the end of 2012 to Bt7.09 trillion.
The Bank for Agriculture and Agricultural Cooperatives is still the leading bond issuer. Long-terms bonds make up 65 per cent, while 35 per cent are short-term bonds. The proportion of five to 10-year bonds has increased, but the overall bond structure has not changed much.
New long-term bond issues in the first half dropped 29 per cent to Bt2.91 trillion from the same half last year.
New debenture issues fell 26 per cent to Bt183 billion. Interest rates are expected to rise in the rest of this year.
To curb foreign capital outflows, Thai BMA sees Bt170 billion-Bt200 billion in new bonds issued by the public and private sectors. Total bond issues for the entire year will come in at Bt370 billion-Bt400 billion.
Institutional investors make up 55 per cent of the local bond market. There was a 20-per-cent surge in foreign investors in the local bond market in the first quarter, but the pace slowed a bit in the second quarter.
The expected curbing of economic stimulus in September is expected to result in some outflow of foreign capital, the volume of which is difficult to estimate.
Since most of the bonds held by foreign investors are long term, foreign capital will still pour in, as Thai and emerging markets are still attractive to foreign investors, he added.
