Expect the Thai private sector to issue debentures past 1.2 million baht, the total year 65 touching 1 million baht, 3 years in a row for sure.
On July 7, Ms. Ariya Tiranaprakij, Deputy Managing Director Thai Bond Market Association (Thai BMA) revealed that the direction of the Thai bond market in 2022 is estimated from the issuance of long-term corporate bonds (debentures) in the first half of 2022 with a value of 660,121 million baht, accounting for 64% of the value of issuance. for the whole year 2021, or an increase of more than 27% from the same period of 2021, with the value of debentures issued in all credit rating groups. and the average maturity increased from 4.7 years to 5.1 years, and it was found that the debentures aged 7 years and above increased significantly during the first 6 months of 2022.
The top three industries with the highest issuance value in the first half of the year were 1.24% energy group, 15% real estate group and 3.3 petro group 13%, which increased the number of newcomers. Up to 14 companies out of 7 companies in the first half of 2021, with the expectation that the whole year 2022, the value of long-term debentures issuance will exceed 1 trillion baht for the third consecutive year, for sure, and there is still a chance to see the value rise to 1.2 trillion baht. baht too
“The US Federal Reserve’s (Fed) policy interest rate hike and the steadily rising inflation rate during the past two quarters have resulted in a higher yield on the 10-year Thai government bond (Bond Yield). 100 bps. or 1% affects the cost of issuing debt instruments of both the public and private sectors However, the value of private bond issuance in the first half of the year increased by 27% compared to the same period last year. This reflects the accelerating funding of private issuers to lock in finance costs. From the expectation that interest rates will increase further in the second half of this year. The debentures are expected to mature at 326,479 million baht in the second half of this year. support the value of debentures to increase,” said Ms. Ariya.
Ms. Ariya said that foreign investment flows (fund flows) during the first two months of the year (January-February) Foreign investors continued to buy net Thai bonds. But it turned into a net sale after the Russo-Ukrainian war. during March before starting to gradually return to buy Before June, another 41,602 million baht will flow out as the Fed raises interest rates. which is seen as not flowing out of the Thai market only As a result, in the first half of 2022, foreign investment inflows decreased by 5,175 million baht. As of the end of June 2022, foreign investors held 1.03 trillion baht in Thai bonds, representing 7% of the outstanding value. Thai bond market The average maturity of bonds held is 8.4 years, including if the Fed raises more interest rates. may see an increase in the outflow of the fund flow but a short holding period of no more than 3 years and definitely not leaving the Thai investment market
Mr. Somjin Sornpaisan, Managing Director Thai Bond Market Association said that with the value of long-term bonds issued in the first half of the year over 600 billion baht, along with the portion that will be issued to replace the models that mature in the second half of the year. Therefore, it is expected that the value of long-term debentures issuance this year will exceed 1 trillion baht for the third year. There is an opportunity to set a new record high if the Thai economy continues to recover. The direction of the association’s operations during the first 2 years (2022-2023) of taking the position of Managing Director will be under the concept of “strengthen, upgrade, drive”, i.e. strengthening of market participants. Raise the level of excellence in the development of integrated information services of the Association. and drive the knowledge and education of market participants as well as promoting ESG in order to achieve sustainable growth of the bond market.
The association has 5 important missions: 1. Being a member regulatory organization which is a financial institution that engages in bond trading business 2. Providing services and being an information center in the bond market 3. Business promotion of market participants 4.Preparing and disseminating bond prices; and 5.Developing the bond market and providing knowledge on bonds to market participants.