November bond sell-off due to QE concerns, not local politics, market association says
About Bt57.11 billion worth of Thai bonds have been dumped by foreign investors this month on concerns over likely reduction of the US quantitative easing programme, while the local political developments have not had any impact on bond investment, accord
Suchart Thanathitiphan, the association’s deputy director, said the likely QE tapering remained the top concern over capital movement in the Thai bond market, not the local political turmoil.
Between November 1 and 25, about Bt57.11 billion in capital fled the bond market, which moved bond yields up by 0.01-0.34 per cent, based on the ThaiBMA’s data. Of the total, Bt41.03 billion worth of short-term bonds were sold and about Bt229 million long-term bonds were bought. About Bt16.31 billion worth of bonds reached maturity.
On Monday, about Bt2 billion worth of short-term bonds and Bt3 billion in long-term bonds were sold. This movement was normal, Suchart explained.
“Such outflows [this month] came from sales of short-term bonds due mainly to concerns over the QE’s tapering, and this picture is the same across the region,” he said.
As of last Friday, net foreign bond holdings totalled Bt729.20 billion. At the end of last year, net foreign bond holdings amounted to Bt708.85 billion. However, net foreign capital inflow totalled Bt20.36 from the beginning of this year to November 22.
“About 80 per cent of total foreign investment [in bonds] is in long-term bonds,” Suchart said.
From the beginning of the year to November 22, newly issued private-sector bonds were worth Bt391.74 billion.
Easy Buy’s Bt1-billion three-year bonds with a 3.48-per-cent coupon rate and Laos’ Bt3-billion 3.5-year bonds with coupon rates of 4.6 and 5.5 per cent are expected to be launched in December, Suchart said.
The plans for new bond issues followed business requirements and financing costs, and had nothing to do with the local political developments, he said.
The Bank of Thailand’s policy interest rate is expected to remain unchanged at 2.50 per cent for the rest of this year and the first quarter of 2014, he said.
