October sees bond market in bearish mood
Play
The Thai bond market remained in a bearish mood in October with net inflow of Bt16 billion on expectation of slowing investment during the long holidays in late 2013, while the local political situation has no impact on the bond market, according to the T
Suchart Thanathitiphan, ThaiBMA deputy director, said the Thai bond market was relatively quiet with no new factors in October, while foreign investors expected possible solutions for the existing factors, including the US debt-ceiling extension and the likely reduction of US asset purchases.
Of the Bt16-billion net foreign capital inflow in October, Bt34 billion went to short-term bonds and Bt12 billion to long-term bonds. Bonds that reached maturity totalled Bt30 billion.
Foreign investors, during the month, bought short-term bonds with more than three months in maturity, compared to those with less than one-month maturity early this year.
As at the end of October 2013, net foreign holdings of bonds amounted to Bt786 billion. Of the total, about 80 per cent were in long-term bonds and the remaining 20 per cent in short-term bonds.
“Local political developments in late October have not affected investment in the bond market,” Suchart said. During November 1-7, net foreign sales of bonds accounted for Bt17.25 billion, which came from Bt23.27-billion sales of short-term bonds and Bt6.02-billion purchase of long-term bonds.
“Foreign investors continued buying long-term bonds, particularly those with three-five year maturity,” Suchart said.
He said that foreign trading on the bond market remained at the normal level. From the beginning of this year to the end of October 2013, Bt77-billion foreign investment flew into the bond market. About 323-billion net investment was made in short-term bonds and Bt131 billion in long-term bonds. Those reaching maturity totalled Bt380 billion.
For the rest of this year, foreign capital is expected to pour into the Thai bond market continuously, however, at a slower rate, given the long holidays, Suchart said.
Presently, foreign investment accounted for 8.7 per cent of total investment in the Thai bond market.
In October 2013, yields on the bond index remained relatively stable with a 0.05-per-cent drop.
“In the first 10 months [of 2013], new bond issues worth about Bt368 billion were launched with those totalling Bt87 billion issued in October,” Suchart said.
For the rest of this year, new bond issues worth about Bt70 billion to Bt80 billion are planned for launch and this could prompt new bond issues to reach a target of Bt450 billion.
“Usually, the political issue will not likely affect companies’ bond issuance plans as they had their spending plans in hand,” Suchart said.
