Thai corporate defaults, deferrals hit 25-year high: TRIS

Corporate credit fragility in Thailand became clearer in 2025, as the rate of defaults and debt-payment deferrals rose to 5.8%, the highest level in 25 years since 2000, according to the latest report by TRIS Rating.

In some key industries—such as regulated utilities, property development, and construction and engineering—the number of default and deferral cases was higher than during the 1997 Asian Financial Crisis (“Tom Yum Kung”), pointing to concentrated risk in capital-intensive businesses that rely mainly on domestic demand, amid a slow and uneven economic recovery and persistently tight financing costs.

In its report titled “2025 Default Statistics and Rating Transition Rates in Thailand”, TRIS Rating said 2025 saw a significant increase in defaults and deferrals among Thai companies. There were six bond issuers that defaulted and six that deferred payments, for a total of 12 issuers—up from eight in 2024.

This pushed the annual default rate up to 2.9% from 0.9% in 2024, while the combined rate of defaults and deferrals rose to 5.8% from 2.9% the previous year. TRIS said this was the highest level since 2000, reflecting elevated credit pressure once again.

More cases than during 1997 crisis in some industries

TRIS highlighted that the total number of default and deferral cases in certain major industries exceeded the level seen during the 1997 Asian Financial Crisis, with cases concentrated in regulated utilities, property developers, and construction and engineering.

However, TRIS explained that while the number of cases is higher, the system-wide picture is not as severe as in 1997. A key difference between 2025 and 1997 is the structure of risk, as well as the much smaller database and the lower number of issuers in the market at that time. Whereas the 1997 crisis involved a sudden collapse of financial institutions driven by currency shocks and foreign-currency debt, the current episode resembles gradual credit deterioration, accumulating across capital-intensive businesses that depend primarily on the domestic economy.

Risk is concentrated, not widespread

TRIS said the latest wave of defaults and deferrals is not spread across all industries, but is clearly concentrated. The largest share is in regulated utilities, accounting for more than 42% of total cases, followed by property development at 17%, and construction and engineering (E&C) at 17%.

The common characteristics across these groups are that they are capital-intensive, carry high debt burdens, and depend heavily on domestic demand, making them sensitive to slow growth, elevated interest costs, and ongoing liquidity constraints.

A fresh warning signal for Thailand’s economy

One point TRIS emphasised is that defaults this time were not limited to low-rated companies. Among issuers that defaulted in 2025, two had previously held an investment-grade rating of “BBB-” in early 2024, before their credit profiles deteriorated and eventually led to default.

This suggests tight credit conditions are spreading from traditionally high-risk borrowers to firms that had previously been considered investment grade—serving as a warning sign for broader corporate credit stability.

Downgrades outnumber upgrades

Credit-rating actions in 2025 remained skewed negative. TRIS reported only 13 upgrades, compared with 31 downgrades, including defaults and deferrals. Although the downgrade-to-upgrade ratio eased to 2.38 times from 3.64 times in 2024, downgrades still exceeded upgrades by more than double—showing credit risk remains a major drag for Thai corporates.

The industries with the most downgrades were regulated utilities, construction and engineering, recreation and sports, and property development—consistent with the sectors showing high default/deferral counts.

Negative outlooks dominate

Beyond rating changes, the report said the rating outlooks for many issuers remained negative. At the end of 2025, 31 issuers carried a negative outlook, versus only three with a positive outlook.

Nearly 40% of negative outlooks were in property development, followed by around 20% in regulated utilities, and about 10% in construction and engineering—indicating corporate weakness may persist through the end of 2025.

Longer-term trend: pressure has accumulated

Looking at the longer period from 1994–2025, TRIS said the cumulative number of defaults rose to 34 issuers, from 28 in 1994–2024, lifting average cumulative default rates across 1-, 2-, and 3-year horizons, with the three-year average rising to 3.11%.

Including deferrals, cumulative cases rose to 51 issuers, pushing the three-year average cumulative rate to 4.62%—suggesting credit risk is not a short-term phenomenon, but a pressure that has been building over several years.

Warning signal for corporates and capital markets

TRIS said 2025 showed rising corporate credit risk on multiple fronts at once: defaults, deferrals, downgrades, and negative outlooks concentrated in key industries. The surge to the highest default-and-deferral level since 2000 is therefore not just a statistic, but a warning sign for corporate stability amid an economy that has not fully recovered and broadly tight financial conditions.