Thai Fixed Income Market 14-18 Mar 2016

Last week the Public Debt Management Office had announced its plan to auction off government bonds for the 3rd trimester of 2016's fiscal year amounting to 1.2 billion baht (coming close to the total amounts of the two previous trimesters). Factors from foreign markets include results from the Bank of Japan's meeting concluding that they will continue on implementing relaxed monetary policies. As for the US's Federal Reserve System - it has predicted that changes to interest rates will only happen twice this year, thus depreciating the dollar as well as the US treasury yield. These external factors perpetuated continual buying power for middle and long-term bonds.

Changes to the yield curve of government bonds in the last week can be seen in the diagram below. Bonds aged between 1-5 years have gone down 4-11 bps, 5-20 years have gone down 11-18 bps and bonds aged over 20 years have declined 8-17 bps. As for the accumulated turnover between March 14 - March 18, foreign investors made a net purchase totaling at 31.5 billion baht in bonds under 1 year of age and made further net purchases of 1.4 billion baht for bonds over 1 year of age.

Taking a look at short-term government bonds, auction results of the 33-day and 93-day-old treasury yielded a result of 1.3690% and 1.3679% per year respectively. As for the auction of 14-day, 91-day and 182-day old national bank bonds yielded an average return of 1.3499%, 1.3708% and 1.3729% (in the order of oldest to youngest). This led to a collective decline of 1-2 bps, another auction of 3-year old government bonds returned with an average yield of 1.3958% per year with 4 times the normal bid coverage ratio, and another auction of 13-year old government bonds came back with an annual average yield of 2.0213% with 2.53 times to regular bid coverage ratio.

Bond Yields of government