ThaiBMA trims 2025 bond issuance forecast to 800 billion baht

Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association (ThaiBMA), revealed that the association has revised down its forecast for corporate bond issuance in 2025 to 800 billion baht, from the previously estimated 850–900 billion baht.

The downward adjustment follows a 19.3% year-on-year decline in issuance value during the first half of the year, with total issuance amounting to 398.82 billion baht. The contraction was seen across both investment-grade and high-yield bonds.

The drop is largely attributed to a decline in maturing bonds, as many issuers opted to extend existing debt. 

Meanwhile, companies with high credit ratings (AAA and AA) issued fewer rollover bonds, choosing instead to delay issuance in hopes of more attractive interest rates. 

Some turned to bank loans or relied on strong internal cash flows, reducing the immediate need to issue new bonds.

Compounding the issue are uncertainties surrounding Thailand-US trade negotiations, ongoing geopolitical tensions, and prolonged sluggishness in the Thai economy since the Covid-19 pandemic.

Although the Thai bond market recorded modest growth in H1 2025, this was mainly driven by an increase in government bond issuance, while the private sector saw a marked reduction in activity.

However, Ariya noted that there is potential for a stronger-than-expected second half, particularly if the outcome of the Trump-era tariff negotiations becomes clearer and brings greater stability to financial markets.

Additionally, if interest rates become more attractive, this could support renewed corporate fundraising through bond issuance.

Somjin Sornpaisarn, ThaiBMA Managing Director, provided an overview of the Thai bond market’s key developments in the first half of 2025.

Bond market expands modestly

As of the end of Q2 2025, the outstanding value of the Thai bond market stood at 17.3 trillion baht, equivalent to 93% of GDP, marking a 1.1% increase from the end of 2024. This growth was mainly driven by government bond issuance, while the value of outstanding corporate bonds declined slightly over the same period.

Foreign investors return

In the first half of 2025, foreign investors recorded a net purchase of 32.33 billion baht in Thai bonds. While January saw a net sell-off of 11.99 billion baht, investors returned in force between February and April, accumulating net purchases of 79.24 billion baht. However, this was followed by another wave of net selling in May and June, totalling 34.92 billion baht.

By the end of Q2, foreign investors held 900 billion baht in Thai bonds, accounting for 5.2% of the market’s total outstanding value.

Government bond yields decline

Government bond yields declined across the curve during H1 2025, in line with the two policy rate cuts by the Bank of Thailand in February and April. As of the end of Q2:

The 2-year and 5-year bond yields both fell to 1.40%

The 10-year bond yield stood at 1.60%

These yields had dropped by 62–70 basis points compared to the end of 2024.

Corporate bond yields also down

Corporate bond yields followed the same downward trajectory. Yields on 5-year bonds issued by firms rated:

AAA fell to 1.88%

AA to 2.29%

A to 2.75%

BBB+ to 3.91%

This represents a drop of 52–93 basis points from end-2024.

Further rate cut expected in Q4

Most market participants anticipate that the Monetary Policy Committee (MPC) will lower the policy rate once more in Q4, by 25 basis points to 1.50% from the current 1.75%.

Bond yield forecasts for the remainder of 2025 suggest a further decline of 5–10 basis points for the 5-year and 10-year tenors, driven by expectations regarding domestic interest rate policy, the Thai and global economic outlook, and monetary trends in major economies.