Thailand will reduce sales of long-tenor debt in favor of shorter notes to soothe investors worried about its plan to lift sovereign borrowing to a three-year high, according to the nation’s debt office.
The government plans to raise 2.43 trillion baht in debt in the fiscal year starting Oct. 1, the most since 2020-21 when it funded Covid stimulus. The near 8% hike in borrowing is to finance a raft of measures announced by the government to lower the cost of living.
The debt office will need to contend with a fading appetite for Thai notes among foreign portfolio investors, who are net sellers of more than $2 billion of Thai bonds after a general election in May triggered a months-long political impasse. The yield on benchmark 10-year bonds have soared about 55 basis points to near an 11-month high since Srettha Thavisin was elected as the prime minister of a coalition government last month.
The debt office plans to address any investor concerns by lowering the ratio of long-tenor bonds of 10 year and more to 48% of total issuance from 54% planned earlier. Thailand is also more reliant on local insurance, pension and mutual funds as foreign investors own only about 5% of government’s outstanding bonds, Patricia said.
The cabinet approval for public debt has penciled in only 194.4 billion baht as new borrowing for 2024 fiscal year, a fraction of the 1.13 trillion baht this year as it takes into account only the ongoing investment projects. The plan will be revised to include budget deficit and new projects, Patricia said.The debt office plans to borrow 19.7 billion baht in loans from Asia Infrastructure Investment Bank and Asian Development Bank for infrastructure projects.
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