Market Summary

Yield Movements

Between 28 February and 15 May, Thailand’s local currency (LCY) government bond yield curve steepened, with yields soaring an average of 96 basis points (bps). Apart from the 4-year tenor, whose yield was unchanged, all other tenors saw a jump in yields. The spread between the 2-year and 10-year yields narrowed from 155 bps on 28 February to 130 bps on 15 May. Thai LCY government bond yields rose in tandem with other regional government bond yields in response to global inflationary pressure and monetary policy tightening by the United States Federal Reserve.

Size and Composition

Thailand’s LCY bond market continued to expand, reaching a size of THB14,998.4 billion (USD450.7 billion) at the end of March. Overall growth rose to 1.8% quarter-on-quarter in the first quarter of 2022 from 1.1% quarter-on-quarter in the fourth quarter of 2021, driven by stronger growth in both the government and corporate bond segments. Annual growth also accelerated, rising to 8.4% year-on-year in the first quarter of 2022 from 5.8% year-on-year in the previous quarter. Government bonds continued to dominate Thailand’s LCY bond market, comprising 72.9% of the total bond stock at the end of March. 

Policy, Institutional and Regulatory Developments

On 12 April, the Government of Thailand approved new borrowing of THB1.40 trillion for fiscal year 2022, up from the previously planned amount of THB1.36 trillion. The new borrowing plan is projected to raise public debt to 62.8% of the gross domestic product at the end of the fiscal year, which is still below the government’s 70.0% limit.