Corporate debt markets in Brazil (Ba2 stable), China (A1 stable), South Africa (Baa3 negative) and Thailand (Baa1 positive) are best-placed to achieve further growth in the coming years, Moody’s Investors Service said today in a report that analyzed trends in 35 emerging markets.
· Study of 35 EMs highlights the key factors for growth of domestic corporate bond markets
These four countries registered the biggest increase in the ratio of mutual funds and insurance investment portfolio assets to GDP between 2010 and 2016, improving their ability to withstand future financial shocks.
“The development of corporate bond markets provides companies with an alternative source of funding beyond bank lending. This can help to mitigate declines in real economic activity from credit disruptions associated with a banking crisis.”Ruosha Li, a Moody’s AVP-Analyst and the report’s co-author
The level of industrialisation in an the economy tends to drive the development of capital markets and results in a need for more capital funding. Countries that are highly reliant on commodity exports often show less progress in industrialisation and are less likely to require as much access to corporate bond market for funding.
The report highlighted the three key factors that help to foster the growth of domestic corporate bond markets: firstly, an increase in the assets under management of domestic mutual funds. Secondly, the growth of insurance companies’ investment portfolios; and lastly, a reliable regulatory regime.
In some cases, the level of the country’s public debt, the size of its domestic equity market and the amount of bank lending to companies also have implications for corporate bond market growth.
Highlights of Thai Bond Market 2018
Total outstanding value of Thai bond market at the end of 2018 surpassed THB 13 trillion for the first time, rising 12% from last year.
Long term corporate bond issuance hit new record high for three consecutive years, reaching THB 879 billion.
Green bond was first issued in Thailand.
Non-resident investor holding of Thai bond reached new all-time high and touched trillion-level to THB 1.002 trillion in November 2018.
For the first time, since the early of the year 10-year Thai government bond yield has declined to stay below 10-year US Treasury yield until now.
The Securities and Exchange Commission of Thailand (SEC) amended regulations effective from April 2018 to tighten selling of bill of exchange (BE) to enhance investor protection
BOT relaxes rules to Curb Strong Baht
the Bank of Thailand (BOT) decided to relax regulations to facilitate capital outflows to help promote capital flow balance and lessen pressure on the baht.
The Thai baht has been under pressure due to imbalanced capital flows in the current environment of highly uncertain and volatile external conditions, the Ministry of Finance (MOF) and the Bank of Thailand (BOT) decided to relax regulations to facilitate capital outflows to help promote capital flow balance and lessen pressure on the baht.(more…)
Bank of Thailand cuts rate by 0.25% to 1.25 per cent
The latest cut brings the Bot’s policy rate to an historical low, which the bank maintained from April 2009 to July 2010 during the subprime global financial crisis.
On 6 November 2019, the MPC voted 5 to 2 to reduce the policy rate by 0.25 percentage point from 1.50 to 1.25 percent, effective immediately. Two members voted to maintain the policy rate at 1.50 percent.(more…)
Thailand’s loss of trade privileges with US is credit negative
The development is credit negative because Thailand’s export-oriented economy is in a difficult external environment given that a broad-based export slowdown and strong Thai baht are weakening the competitiveness of goods exporters and the country’s tourism industry.
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