Thai Fixed Income Market 29 Feb-4 Mar 2016

Following the auction, government bonds with over 10 years of age (on-the-run government bond) are worth 13,000 million baht. This piqued interest in many investors but only one gained total control, making the sentiment of the bond market in the first week of March, especially towards the end of the week, a lowered one which coincides with the decreased returns of government bonds. Even lower than the lowest returns of February, where that was due to institutional investors changing their viewpoint on the Federal Reserve System's increasing interest rates. This is combined with concerns over China's economy affecting the growth of their economic partners.

Taking a look at the primary market for government bonds, auction results of the 28-day old treasury yielded a result of 1.3818%. As for the auction of 14-day, 91-day and 182-day old national bank bonds yielded an average return of 1.3924%, 1.4033%, 1.4261% and 1.4286% (in the order of oldest to youngest). Another auction of the 10-year old government bonds was held this past Wednesday, returning with an average yield of 2.034% - sparking widespread amongst investors with three times the regular bid coverage ratio.

Changes to the yield curve of government bonds in the last week can be seen in the diagram below, where the short-term (under 1 year old) bonds show little change, bonds aged 1-10 years have gone down 2-17 bps, and bonds over 10 years of age experienced a decline of 17-29 bps. As for the accumulated turnover between February 29 - March 4, foreign investors made a net purchase totaling at 12,144 million baht in bonds under 1 year of age and made net sales of 5,568 million baht for bonds over 1 year of age.

Bond Yields of government