Kasikorn Research Center stated that government bond yields surged worldwide after the US government announced a bond buyback plan of only 6 billion dollars, below market expectations of nearly 10 billion dollars. Dr. Kanchana Chokpaisarnsilp, research executive at Kasikorn Research Center Co., Ltd., said the impact on Thai bond yields may not yet be very clear, since Thailand's policy interest rate will remain steady at 1% for the foreseeable future. Thai 10-year bond yields rose to 2.29%, up 60 basis points; 7-year yields stood at 1.99%, up 57 basis points; 5-year yields stood at 1.69%, up 39 basis points; 3-year yields stood at 1.34%, up 16 basis points; and 2-year yields stood at 1.26%, up 12 basis points. The policy interest rate will limit short-term bond yields from rising much, but long-term bond yields such as the 10-year may surge in line with global market movements, which will in turn become a cost for businesses issuing bonds. Every borrower will face the same reference point in US bond yields, but how much more expensive borrowing becomes depends on the credit spread, with those rated poorly facing higher interest rates, posing a challenge for bond issuance in the remainder of the year.
Global bond yields surged after the US buyback fell short of expectations, pushing Thailand's 10-year yield up 60bp to 2.29%.
Thai 5-year bond yield rose 39bp to 1.69% in line with the global yield surge, though the steady 1% policy rate limits short-term rises.
