Conversely, large corporations can issue and offer bonds as usual. With interest rates falling, they can still compare the cost of bank loans with bond issuance.
The ThaiBMA has been engaging with issuers months in advance to ascertain their repayment capabilities and sources of funds, receiving cooperation from distributors, bondholder representatives, and many issuers.
Issuance Slowdown but Outlook Stable
New corporate bond issuances for 2025, as of June 24, stand at 378 billion baht, down from 462 billion baht in the same period last year.
The decline is predominantly in the high-yield segment. Despite this, the target for new bond issuances this year remains 900 billion baht.
This is based on the view that large companies are unaffected by negative factors this year, and declining interest rates present opportunities for fundraising.
However, businesses generally remain cautious, and when negative factors emerge, bond yields tend to fall as investors seek safer assets.
Bodin Buddhain, Director of Investment Strategy at Eastspring Asset Management (Thailand), observed that June has seen a rise in defaults and debt extensions, mainly in the high-yield sector.
“This reflects early signs of the Thai economy’s fragility impacting the profitability of listed companies,” he said. “The economic outlook for this year still carries a risk of growth below potential, due to high uncertainty from both domestic politics and the Trump tariff negotiations.”
Eastspring’s fund strategy avoids investing in corporate bonds rated BBB and BBB-, as these are at risk of being downgraded to high-yield if they cannot meet their obligations. Instead, the focus is on higher-quality instruments rated A- and above, with consideration for business growth prospects and profits from core operations, rather than from exchange rate gains or asset sales. Caution is also advised for sectors tied to economic cycles.