PDMO increases issuance

- +

The Public Debt Management Office has increased the amount of government bond issuance by 10% from the 13 billion baht previously planned in light of low interest rates, says Theeraj Athanavanich Bond Market Advisor.

"The 30-year government bonds worth 13 billion baht launched yesterday have seen overwhelming responses from investors, so we take the opportunity to issue additional bonds to total 14.3 billion baht." said Mr Theeraj.

Under normal practice, the PDMO announces the government bond sales in advance to allow investors to prepare. However, the market is currently highly volatile, he said.

"Late last year bond yields increased by 50-60 basis points, but since January this year they have declined tremendously," said Mr Theeraj.

He said the PDMO has to be flexible in bond management to ensure the fiscal burden is as low as possible.

"The additional 10% bonds issued in the market should not make much impact."

Finance Minister Apisak Tantivorawong has directed the PDMO to keep track of the flow of money closely for the efficient management of public debt.

"The minister wants us to keep watching the market as it is now very unpredictable. When the US Federal Reserve signalled it would raise the rate again after the doing so in December last year, a rapid rate rise was anticipated, but once the rate was raised in February, trends proved otherwise and the rate fell," said Mr Theeraj.

Last month the Fed raised the rate by 25 basis points and the market anticipates further increases this year.

Over the past two weeks, emerging markets, including Thailand and others in Asia, have experienced an influx of foreign capital inflow resulting in lower bond yields across Asia, varying from three to 15 basis points, pushing these countries' currencies to slightly stronger positions against the greenback.

Foreign capital continued to flow into Thailand until last week, when there was a 10 billion baht outflow to temper the appreciation.

Next month, Mr Theeraj said the PDMO will issue another lot of saving bonds of five and 10 years maturity worth 15 billion baht.