Issuances of bonds, debentures expected to reach Bt500 bn this year

Economy January 22, 2014 00:00

By Takayuki Kanaboshi
The Nation

Demand to issue bonds and debentures from both the private and public sectors will reach Bt500 billion this year, nearly last year's volume.

About Bt400 billion-Bt420 billion will be issued by the private sector and the rest by the public sector, Niwat Kanjanaphoomin, president of the Thai Bonds Market Association, said yesterday. 
The country’s political problems will not dissuade the private and public sectors from issuing bonds and debentures this year, he said. 
“We estimate the new debentures and bonds will be worth Bt113 billion in the first quarter of this year,” he said.
Last year, outstanding bonds rose 4.08 per cent to Bt8.99 trillion from Bt8.58 trillion in 2012, of which Bt1.59 trillion was outstanding private sector debentures, up 13 per cent from Bt1.4 trillion in 2012.
Corporate bonds issued in 2013 fell from Bt509 billion in 2012 to Bt418 billion due to the reduced appetite of commercial banks, which issued Bt180 billion worth of bonds in 2012 and only Bt28 billion in 2013. 
Of all the trading in the secondary market in 2013, 32 per cent was between bond traders. The remaining 68 per cent was between bond traders and investors, and of the 68 per cent, 57 per cent was by asset management companies and 18 per cent by non-resident investors (NRs). NRs focus mainly on government bonds, which means the bonds held by NRs – Bt709 billion as of December – are a significant percentage of total government bonds – about 20 per cent.
Last year, NRs sold a net Bt942 million of bonds. However, this wasn’t a worrying figure, as long-term bonds are still being held by NRs and most of the sales were in short-term bonds. 
However, January 1-17 of this year saw a net outflow of Bt8.6 billion, as long-term bonds worth Bt18 billion were dumped. 
This is “something to keep an eye out for”, he said.
Although the political situation has had some effects – such as on government bond yields, which suffered a slight decline in December after the dissolution of the House – he sees an end in sight, likely by the end of next month.