Government plans to issue more long-term bonds

Thailand’s government is planning to issue significantly more long-term sovereign bonds presenting an opportunity for investors as the Kingdom strives for balance in funding its pandemic control and economic stimulus measures.

The global credit rating arm of Standard & Poor’s has maintained Thailand’s sovereign rating of BBB+, citing Thailand’s stable fiscal position and prudent management. That makes Thailand a good bet for investors because of its ability to meet its debt obligations, including sovereign bonds.

Bonds will make up between 48 percent and 56 percent of the government’s borrowing of $68 billion in the fiscal year that just began. Last year, bonds made up 31 percent. Most of them, however, were short-term securities such as promissory notes and treasury bills, said Patricia Mongkhonvanit, Director-General of the Public Debt Management Office (PDMO).

“It’s time for us to mitigate the risks from heavily issuing short-term instruments in the previous year,” Patricia said. “We plan to issue more long-term bonds to meet investors’ demand.”

She also added that the long-term bonds would likely have maturities of at least 15 years as that was what most funds and companies prefer.

The PDMO plans to auction about $8 billion worth of bonds from now through December, almost 18 percent more than the previous quarter. The funds raised would to support expanded stimulus measures.

According to Patricia, the increased supply should not hurt the market because Thailand has ample domestic liquidity. Moreover, while the new borrowing would result in a higher public-debt ratio, it is unlikely to hurt the country’s credit ratings. “The higher cap would give the government more flexibility to finance value-added projects and boost the economy, resulting in stronger growth and increased revenues to meet debt obligations,” Patricia added.

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