ThaiBMA predicts B900bn in 2025
PUBLISHED : 10 Jan 2025 at 06:20
Thai corporate bond issuance this year is projected to tally 850-900 billion baht, on par with last year, though the market continues to face risk from defaults and debt deferrals amid economic uncertainty, says the Thai Bond Market Association (ThaiBMA).
President Somjin Sornpaisarn said the outstanding value of the Thai bond market is 17.1 trillion baht, up 3.6% from the previous year. This growth is primarily driven by the issuance of government debt instruments.
In 2024, the issuance of corporate long-term bonds totalled 913 billion baht, down 10% year-on-year, attributed to economic volatility and rising interest rates.
High-yield bond issuance also decreased greatly compared with investment-grade bonds, highlighting investor caution.
The top three industries with the highest bond issuance were finance and securities, real estate and energy. ThaiBMA expects new corporate bond issuances in 2025 to remain steady at 850-900 billion baht.
Ariya Tiranaprakit, executive vice-president of ThaiBMA, said 11 companies had credit rating downgrades last year, bringing the total number of downgraded companies to 46.
Of these, 10 companies saw their ratings drop from BBB+ to below investment grade, largely due to the economic slowdown. On the other hand, 13 companies had their credit ratings upgraded.
There were five bond defaults last year involving 3.17 billion baht worth of bonds. Among these, Sabuy Technology was the only listed company on the Stock Exchange of Thailand, while the rest were non-listed entities.
Deferred debentures totalled 38 billion baht, involving 17 issuers, of which 12 were first-time defaulters.
Energy Absolute (EA) has corporate bonds maturing this year, consisting of four tranches with a total value of 6.2 billion baht. These bonds are likely to be repaid using revenue from the company’s electricity sales, said Ms Ariya.
Meanwhile, concerns have arisen regarding the Agriculture and Agricultural Cooperatives Ministry’s adjustment of investment conditions for cooperative debentures. The changes limit cooperative bond investments to no more than one time the value of share capital and reserves.
Cooperatives are required to comply with these rules for 10 years. Cooperatives have invested more than 500 billion baht in the bond market, accounting for 12% of the total Thai bond market, she said.
Several large cooperatives with assets exceeding 4 billion baht have invested more than the permitted threshold. As a result, they will no longer be able to increase their bond holdings and must gradually reduce their positions, said Ms Ariya.
A ThaiBMA survey of policy interest rate expectations for 2025 found most market participants expect the Monetary Policy Committee will cut rates twice by a total of 50 basis points to 1.75%. The first adjustment is expected in the second quarter.
Foreign investors had net cumulative sales of Thai debt instruments valued at 67.4 billion baht in 2024. At the end of 2024, foreign investors held 870 billion baht in Thai debt instruments, representing 5% of the total market value.