Thailand Moves to Tweak Between Short & Longer Term Debt Instruments, says Bloomberg

Thailand will shield its government borrowing plan from surging bond yield by reallocating the mix of short-and longer-term debt instruments it issues, according to the nation’s Public Debt Management Office.

Thailand’s ration of debt carrying fixed and floating returns to minimize the impact of rising borrowing costs, Public Debt Management Office Director-General Patricia Mongkhonvanit said in e-mailed response to Bloomberg questions as reported by Bloomberg. The nation is set to raise a total of 1.4 trillion baht ($40.3 billion) in the fiscal year that began on Oct. 1, according to Bloomberg.

The debt office is looking to switch as much 140 billion baht of short tenor sovereign bonds for those longer maturities this week. The movement comes after it suspended a planned dollar bond offering citing higher borrowing costs.

The yield on benchmark 10-year Thai bonds have spiked more than 140 basis points this year in tandem with the US Treasury even as the Bank of Thailand held its interest rates at a record low of 0.5% to support a nascent economic recovery.

“The bond yield increase may raise the borrowing cost but the debt office has managed the risk for the government debt portfolio,” Patricia said to Bloomberg.

“The PDMO is confident that under such circumstances, we will be able to continue fund-raising by adjusting the proportion of each type of instrument to meet the needs of investors.”