The Thai Bond Market Association (TBMA) has raised its forecast for corporate bond issuance this year to 900 billion baht from 700 billion to 750 billion baht, as private companies seek to replenish their capital reserves in a context of economic uncertainty, said TBMA President Tada Phutthitada.
The value of corporate bond issues in the first half was 552 billion baht, up 63% from the same period last year, with the value in the second half expected to exceed 400 billion.
“The third wave of the pandemic has not affected long-term corporate bonds, with the issue value rising steadily every month since April,” Tada said.
He said that an increase in government bond issuance will not increase bond yields and affect corporate bond issuance as the country’s savings rate remains high, allowing it to afford the issuance of government bonds.
Government bond financing might not even have an impact on the country’s credit rating, Tada said.
“The country’s current credit rating, BBB +, is underestimated and it should have been raised to A before the Covid-19 crisis because our definition of public debt is significantly stricter than the international definition,” he said. -he declares.
Thailand’s current 60% public debt ceiling includes real sector SOE debt, which is not included in the international definition.
Bonds issued by the banking sector rose 21%, while those issued by the real sector rose 78% covering most credit ratings in the first half of this year.
In addition, 33% of corporate bonds issued were placed in a public offering, while 46% were offered to institutional and high net worth investors.
Mr Tada said TBMA is monitoring the growing proportion of individual investors who hold corporate bonds.
The growing numbers suggest that investing through intermediaries, which is better in terms of diversification, has declined.
In the first quarter of this year, individual investors contributed 35.3% of the total holding value of 3.395 billion baht, up from 34.8% of the total of 3.396 billion in the fourth quarter of 2020 and 31.5% out of a total of 3.4 trillion in the fourth. quarter 2019.
“We need to promote bond investments through mutual funds and financial intermediaries so that investors can diversify the risks,” he said.
Mr Tada said a troubled asset fund should lead the country’s bond ecosystem as a vehicle that encourages institutional investors to invest in high-yield, higher-quality bonds.
According to TBMA, no obligation has defaulted this year.
However, there were requests for extension of bond payments for 17 tranches of nine companies as of mid-June of this year.
He expects that there will be very few debt extensions and the size of the extensions will be small, not exceeding 1 to 2 billion baht this year.
In the first half of this year, foreign investors reported net purchases of corporate bonds worth 73.4 billion baht.
The TBMA expects the government bond yield curve to accelerate following rising U.S. bond yields as the U.S. Federal Reserve signaled a slowdown in quantitative easing.
“Foreign fund flows might not change in the third quarter, but there could be outflows of foreign capital in the fourth quarter if there is news about the reduction,” Tada said.