Market Summary

Yield Movements

Between 15 June and 15 August, Thailand's local currency government bond yields rose for most tenors, gaining an average of 4 basis points across all tenors. The rise in yields for most tenors reflected weakened appetite for Thai sovereign bonds as the spread of the coronavirus disease drove the economy to its deepest contraction since the global financial crisis. Thailand's gross domestic product plunged 12.2% year-on-year (y-o-y) in the second quarter of 2020 after declining 1.9% y-o-y in the first quarter. Thailand's economy was among the hardest hit by the pandemic in emerging East Asia due to its heavy reliance on exports and tourism.

Size and Composition

Thailand's local currency bonds outstanding reached THB13,448.9 billion (USD435.1 billion) at the end of June on growth of 2.1% quarter-on-quarter and 3.2% y-o-y. The quarter-on-quarter rise in Q2 2020 was driven by strong growth in the government bond segment as the government issued debt to finance measures to combat the negative effects of COVID-19 on the economy. The Thai bond market is largely composed of government bonds, which accounted for 72.4% of the total bonds outstanding at the end June.

Policy, Institutional and Regulatory Developments

On June 24, Public Debt Management Office of the Ministry of Finance issued THB200 million worth of savings bonds at an unprecedented face value of THB1 each through Krungthai Bank's blockchain-based e-wallet. Using the blockchain system, the Public Debt Management Office was able to lower the amount of the savings bond face value from the regular THB1,000. The small-ticket bonds were part of the government's plan to encourage low-income earners to invest in risk-free assets.