CIMB THB Weekly Fixed Income Commentary for 19 Sep 2014

Market Roundup

• Last week’s Bank of Thailand’s policy rate meeting ended with no change to the benchmark interest rate, which was mostly expected by the market. Shorter dated Thai government bonds showed marginal gains whilst overall volume traded along the govvies segment was a tad lower last week. Meantime, longer dated bonds ended unchanged to weaker. The 3- and 5-year government benchmark papers fell 2-3bps to 2.54% and 2.98% respectively, whilst the 10-year govvies closed unchanged and the 20-year papers rose 7bps to 3.96%.
• Meantime, the government released its indicative funding plans for fiscal year 2015 (FY2015) which runs from October 2014 till September 2015. The government’s funding is indicatively planned at Bt705 billion (versus Bt756 bilion in FY2014), of which Bt390 billion is refinancing of maturing government debt in FY2015, while new borrowings will come up to Bt315 billion (of which deficit financing would be Bt250 billion) with the remaining borrowing plans comprising rollover of government, FIDF and other borrowing. It will issue THB350 billion of government bonds in FY2015, comprising of 5-, 10-, 15-, 30-, and 50-year benchmarks. These are added to the planned THB55 billion of amortized bonds, THB40 billion of inflation-linked bonds and other types of offerings. The smaller amount of total borrowings planned for issuance in FY2015 will aid sentiment along the govvies segment next year (lessened supply concerns), in our opinion.