Bloomberg News

Thai Bonds Set for Sixth Weekly Gain on Inflows, Rate-Cut Bets

November 01, 2012

Thailand’s government bonds headed for a sixth weekly advance, the longest stretch in a year, as global funds boosted holdings amid speculation the central bank will lower borrowing costs. The baht rose.

Inflation slowed last month to 3.32 percent from 3.38 percent in September, official data showed yesterday, even as the Bank of Thailand unexpectedly cut its policy rate by a quarter of a percentage point to 2.75 percent. International investors bought $481 million more sovereign debt than they sold this week through yesterday after the central bank lowered its 2013 growth forecast to 4.6 percent on Oct. 26 from a previous estimate of 5 percent.

“Funds are flowing into Asia recently amid improving risk sentiment,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “In Thailand, bonds attract more funds than stocks especially as they just cut rates while economic outlooks remain weak.”

The yield on the 3.625 percent notes due May 2015 fell seven basis points, or 0.07 percentage point, this week to 2.86 percent as of 8:39 a.m. in Bangkok, according to data compiled by Bloomberg. The rate, unchanged from yesterday, was the lowest since Dec. 14, 2011. The Bank of Thailand will next review monetary policy on Nov. 28.

The baht, little changed today, rose 0.1 percent this week to 30.73 per dollar, halting a three-week decline, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged today and this week at 4.27 percent.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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