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The Thai Bond Market Association (ThaiBMA) projects the value of corporate bond issuance will range between 850-900 billion baht in 2025, similar to the previous year, amid the economic slowdown and impacts from the recent earthquake. The reciprocal tariffs announced by US President Donald Trump last week may impact property developers, potentially leading to credit rating downgrades. Ariya Tiranaprakit, executive vice-president of ThaiBMA, said small companies will face greater challenges raising funds through the bond market during the economic slowdown.
She said investors are shifting away from high-yield bonds and focusing more on those with high credit ratings. In contrast, large corporations are increasingly opting to issue and offer bonds through public offerings (POs), especially in an environment where interest rates are clearly declining. For example, Gulf Energy Development raised 30 billion baht through a bond PO in the first quarter.
"With global uncertainty affecting the stock market, including trade wars, US tariff hikes and the earthquake, some investors, both local and foreign, have shifted their investments back into the bond market as a secured asset," said Ms Ariya. The Thai bond market grew by 2.2% in the three months to March, driven primarily by an increase in government bonds.
Meanwhile, the outstanding value of corporate bonds remained stable, with higher-rated bonds seeing more issuances than maturities. Foreign investors were net buyers of 18 billion baht worth of Thai bonds year-to-date, according to ThaiBMA. Foreigners were net sellers of 12 billion baht in January, but buying activity rebounded in February and March with 22.
3 billion baht in net purchases, following Trump's inauguration. By the end of the first quarter, foreign holdings in Thai bonds tallied 874 billion, or 5% of the total bond market. A market survey suggested the Bank of Thailand may cut its policy rate 1-2 times in the second half of the year, totalling reductions of 25 to 50 basis points (bps) for 2025.
Managing director Somjin Sornpaisarn said the outstanding value of Thailand's bond market at the end of the first quarter was 17.5 trillion baht, marking a 2.2% increase year-on-year, attributed to the expansion of government bonds.
Long-term corporate bond issuance totalled 204 billion baht, down 1.76% from the previous year. Investment-grade bonds had higher issuances than maturities, while high-yield bonds saw fewer new issuances than maturities, he said.
The top three sectors for bond issuance in the first quarter of 2025 were energy, property and finance. The government bond yield curve declined, particularly in late February due to the central bank's unexpected rate cut to 2%. As a result, two- five- and 10-year bond yields fell by 31-35 bps from the end of 2024 to 1.
69%, 1.74% and 1.99%, respectively.
Corporate bond yields also declined. Five-year corporate bond yields for different ratings fell by 26-52 bps, reaching 2.29% for AAA-rated bonds, 2.
63% for AA-rated bonds, 3.01% for A-rated bonds and 4.31% for those rated BBB+.
Yields of five- and 10-year bonds are expected to decline by 4-7 bps for the remainder of 2025, mainly influenced by the central bank's monetary policy direction, Thailand's economic growth outlook and interest rate trends in major economies, noted the ThaiBMA. The Thai bond market is likely to remain sensitive to global monetary policies and domestic economic developments in the coming quarters, said Mr Somjin. The ThaiBMA said high-yield bonds maturing in 2025 total 95 billion baht, with 14% facing rollover difficulties, particularly from smaller issuers.
These firms may need to seek bondholder approval to postpone debt payments to avoid default, he said. "Bond defaults have decreased. However, issuers often seek approval from bondholders to postpone payments, resulting in fewer defaults," said Mr Somjin.
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