Thailand's government bond market is currently one of the most prominent in Asia. Over the past month, the country's bond performance has outperformed most bonds in emerging Asian markets.
Analysts also expect this performance to continue to improve over the next year, supported by lower bond supply and slowing inflation.
One of the main factors supporting Thailand's bond market is still moderate economic growth and contained inflationary pressures.
This situation gives the Bank of Thailand room to keep interest rates low without having to rush to raise them.
Stable interest rates usually increase the attractiveness of bonds because investors can enjoy more consistent returns.
In addition, the Thai government is expected to reduce the amount of bond issuance this fiscal year.
The amount of new bonds to be issued is estimated at around 1.26 trillion baht, lower than the original target of 1.3 trillion baht.
When the supply of bonds decreases but investor demand continues to increase, bond prices usually rise, thus causing yields to fall.
Slowing inflation has also given investors confidence. In June, Thailand’s annual inflation rate fell to 2.42% from 2.79% the previous month, lower than analysts’ expectations.
The Bank of Thailand governor also said that inflation this year is likely to be lower than previously forecast, reinforcing expectations that interest rates will be kept on hold for the time being.
Demand for Thai bonds has also remained strong. Recent auctions of 10-year and 30-year government bonds have been well-received by investors, indicating continued confidence in the market.
In fact, Thailand’s 10-year bond yield is expected to continue to decline to around 1.73% by mid-2027.
This reflects expectations that Thai bonds will continue to be among the top choices for investors in the Asian region if inflation remains under control and the country’s monetary policy remains unchanged.
