Thai bond market set for 890 billion baht redemption this year

This year, bonds worth an estimated 890 billion baht (US$25,406,794,400), primarily investment-grade, are slated for redemption, according to the Thai Bond Market Association (ThaiBMA). Around 73 billion baht (US$ 2,083,928,080) of these are set to mature within this month.

The association’s president, Somjin Sornpaisarn, anticipates Thai private enterprises to float long-term bonds of approximately 1 trillion baht (US$ 28,546,960,000) throughout the year. This figure includes 450 billion of newly issued bonds and about 550 billion in rollovers.

In the preceding year, private firms floated long-term bonds exceeding 1 trillion baht (US$ 28,546,960,000), triggering a 5.4% expansion in the bond market’s value. Despite foreign investors offloading 150 billion baht (US$ 4,280,823,000) of Thai bonds last year, a net buying position is anticipated in the final quarter, following the US Federal Reserve’s indication of ceasing interest rate hikes.

By the end of last year, the Thai bond market had a total outstanding value of 16.5 trillion baht (US$ 470,890,530,000). The sectors with the highest value were finance and securities, energy, real estate, and banking.

Defaults accounted for 0.8% or 16.4 billion baht (US$468,036,648), of the total outstanding value last year, with All Inspire, Cho Thavee, and JKN Global Group being the issuers. This year saw Phi Phi Holiday Co Ltd, a non-listed company, defaulting on its bond payments worth 392 million baht (US$11,187,217), reported Bangkok Post.

Italian-Thai Development (ITD) is planning on deferring the payment on bonds worth 14.4 billion baht (US$410,959,008). The company has scheduled a meeting on January 17 to seek bondholders’ approval for a two-year redemption postponement.

Bond redemption

Ariya Tiranaprakit, the Deputy Managing Director of ThaiBMA, urged investors to exercise caution when investing in high-yield bonds. Somjin added that ITD’s announcement of deferring bond redemption, including 2 billion baht (US$57,077,640) due this month, has somewhat impacted the bond market, particularly high-yield bonds.

The bonds due for redemption this year, worth 890 billion baht (US$25,406,794,400), are mainly from the property sector (157 billion baht) (US$4,479,315,190), followed by finance (153 billion baht) (US$4,365,192,510) and energy (127 billion baht) (US$3,623,395,090). A ThaiBMA survey showed that most market participants expect the policy interest rate to maintain at the current 2.50% in the first half of the year.

The two-year Thai bond yield increased 71 basis points (bps) from the previous year to 2.34% by December, while the 10-year Thai bond yield rose 6 bps to 2.70% and the five-year bond yield gained 21-40 bps.

Foreign investors had a cumulative net sale of 150 billion baht (US$4,280,823,000) in 2023 and held Thai bonds worth 940 billion baht (US$26,818,829,800), accounting for 5.7% of Thai bonds’ outstanding value. The average remaining holding period rose to 8.4 years from 8 years at the end of 2022.