Kasikorn Asset Management (KAsset) has reported that Moody’s has revised Thailand’s credit outlook from “stable” to “negative,” while maintaining the credit rating at Baa1.
The primary concerns leading to this change include slowing economic growth, rising public debt, and delays in trade negotiations with the United States. These issues may influence the bond market, potentially causing short-term increases in bond yields as a reflection of investor concerns.
However, KAsset expects the overall impact on the Thai bond market to be limited due to several factors:
- The change is in the outlook (not the rating), keeping Thailand’s credit rating at Baa1. Concurrently, two other main Credit Rating Agencies, S&P and Fitch, maintain their ratings and outlook at BBB+ (Stable).
- Foreign investor participation in the Thai bond market remains low, and domestic liquidity levels are high.
- Market investors are still placing significant weight on the likelihood of a policy interest rate cut in the near future.
KAsset sees this situation as an opportunity to gradually accumulate bond funds. Bond market yields are expected to exhibit increased volatility initially, presenting an investment opportunity in bond funds with potentially higher returns (as prices decrease). Additionally, the downward trend in interest rates is favorable for bond investments.
Every bond fund managed by KAsset is carefully and cautiously managed, with sufficient liquidity to handle market volatility. The focus remains on investing in high-quality issuers to deliver stable returns to unitholders in line with investment policy.
KAsset recommends the following bond funds:
- K-SF: A short-term savings fund for 1-3 months, offering a safer alternative for those not ready to invest in riskier assets.
- K-SFPLUS: A short-term savings fund for 3-6 months, aiming for higher returns through foreign investments.
- K-FIXEDPLUS: A medium to long-term bond fund with a duration of 2-4 years, investing in both domestic and international bonds, requiring a minimum investment of 1-1.5 years.
- K-FIXED: A medium to long-term bond fund with a duration of 2-4 years, focusing on domestic investments only, also requiring a minimum investment of 1-1.5 years.
