Foreigners seen cutting Thai bond holdings in H2 - association
BANGKOK, July 7 (Reuters) - Foreign investors may continue moving out of Thai bonds in the second half of the year as the spread between Thai and U.S. interest rates widens further, an industry body said on Thursday.
Such outflows, however, should not have a big impact on the Thai debt market due to low foreign holdings, Somjin Sornpaisarn, president of the Thai Bond Market Association, told a news conference.
In the first half of 2022, foreign investors sold 5.2 billion baht ($144 million) net of Thai bonds, but still retained 1.03 trillion baht of debt, or 7% of the total market.
"The bond market is lucky as it does not rely on foreign investors that much," said Somjin, explaining the selling pressure as due to interest rates being out of line.
U.S. interest rates are at 1.5% to 1.75%, while the Bank of Thailand (BOT)'s key interest rate is at a record low of 0.50%.
The BOT, however, is expected to raise its key interest rate THCBIR=ECI at its next meeting on Aug. 10, Somjin said.
The association also predicts a record issue of long-term corporate bonds of 1.2 trillion baht this year as investors lock in low interest rates, he said, noting 660 billion baht bonds were sold in the first half of the year.
That compared with 1.04 trillion baht of debt sold last year.
($1 = 36.11 baht)
Reporting by Satawasin Staporncharnchai Writing by Orathai Sriring Editing by Ed Davies
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