Singapore, April 21, 2020 — Moody’s Investors Service (“Moody’s”) has today changed its outlook on the Government of Thailand’s issuer ratings to stable from positive and affirmed the Baa1 issuer and local currency senior unsecured ratings.

Moody’s has also affirmed Thailand’s foreign currency commercial paper rating at P-2.

The decision to change the outlook to stable reflects Moody’s view that the drivers of the outlook change to positive last July have become significantly less likely to materialize.

Ongoing political tensions and deep economic shock

In particular, in light of delays in policy implementation and ongoing political tensions, and more recently, the deep economic shock caused by the coronavirus outbreak, government policy is unlikely to effectively implement large investment in physical and human capacity that would boost the country’s competitiveness over the near to medium term.

The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, and falling asset prices are creating a severe and extensive credit shock across many sectors, regions and markets.

The combined credit effects of these developments are unprecedented. Moody’s regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and
safety.

Sharp slowdown in tourist arrivals

For Thailand, the current shock transmits mainly through a sharp slowdown in tourist arrivals, exports of goods, and economic activity.

Long-term infrastructure investments will be further delayed as policy focus shifts to offsetting effects of the economic shock, compounding the apparent difficulties in designing and implementing policies for the current coalition.

The affirmation of Thailand’s Baa1 ratings reflects Moody’s view that the country’s strong public and external finances provides Thailand with significant room to counter shocks, including those currently emanating from the coronavirus.

Thailand’s past record of solid fiscal metrics suggests that fiscal repair is likely after a marked increase in the government’s debt burden in the next few years. In addition, Moody’s expects that Thailand’s large and diverse economy will absorb the current shock to economic growth without a lasting impact on its growth
potential.

Moderate competitiveness and labour skills shortages

These credit features are balanced by an ageing population, moderate competitiveness and labour skills shortages, which will weigh on the economy’s medium- to long-term growth if unaddressed.

Thailand’s country ceilings remain unchanged. The long-term foreign currency bond ceiling remains at A2, and the short-term foreign currency bond ceiling at P-1. The long-term foreign currency deposit ceiling remains at Baa1, and the short-term foreign currency deposit ceiling at P-2. Furthermore, the long-term local currency bond and deposit ceilings remain unchanged at A1.