Foreigners’ investment in short-term bonds in Thailand up by $2.55bn

Japan's disaster and high uncertainty in the world economy prompted local and foreign investors to focus on short-term bonds.

Foreign funds have flowed into Thai short-term bonds in order to guard against the risk of economic uncertainty in Japan and globally, according to the Thai Bond Market Association.

Of the foreign net holdings in Thai bonds totaling 372 billion baht ($12.31 billion), as of last week, 90% were in short-term debt, said Ariya Tiranaprakij, the executive vice-president of the ThaiBMA.

Since the earthquake and tsunami in Japan, overseas net holdings in Thai bonds have increased, continuing a trend evident since the start of this year. Foreign holdings in January alone rose by 77 billion baht ($2.55 billion) from total net holdings of 280 billion baht ($9.27 billion) at the end of December, she explained.

"Both local and foreign investors mainly focus on short-term bonds during times of high uncertainty in the world economy, particularly after Japan's disaster, while Thailand's interest rates show clear signals of an upward trend," she said.

The ThaiBMA forecasts new corporate debt issues this year of around 300 billion baht ($9.93 billion), up from 280 billion ($9.27 billion) last year.

About half of the value of new issues will be used to roll over existing obligations. Around 150 billion baht ($4.96 billion) of existing debentures are due within this year.

Since the beginning of the year, corporate issuers have registered new bond issues worth 93 billion baht ($3.08 billion).

View the full story in The Bangkok Post.