Krungsri Securities (KSS) wrote in its analysis regarding the outlook for Thailand’s sovereign credit rating in light of recent policy developments and global economic headwinds. Speculation has resurfaced regarding a potential downgrade to the nation’s credit rating, after the government signaled its intent to raise the public debt ceiling to 75% of GDP from the current level of 70%.
This comes alongside plans to issue an emergency royal decree for additional borrowing of THB 500 billion, a response to the pressures from the ongoing tensions in the Middle East that have affected Thailand as a net energy importer.
Krungsri, however, assesses that the probability of an imminent ratings downgrade remains limited. Instead, the primary risk lies in a potential downgrade of the country’s credit rating outlook. Based on current fundamentals, Thailand is in a stronger position than during previous periods of economic stress, notably the 1997 Asian Financial Crisis that led to Thailand’s most recent ratings cut.
Key supporting factors include a steady decline in the ratio of external debt to GDP, which is estimated at 35% for 2025 (down from 42% in 2023 and substantially lower than the 50% seen in 1997). Short-term external debt as a share of GDP is also estimated to be just 15% in 2025, compared to 40% during the 1997 crisis. Meanwhile, international reserves have reached a robust $250 billion, eight times higher than during the 1997 crisis.
Thai political stability remains high, with the current administration pursuing targeted policy measures that demonstrate fiscal discipline and a focus on investment for long-term economic transformation. Should fiscal policies continue to prioritize structural reform over short-term stimulus, these trends are likely to bolster market confidence.
Statistical data further reinforce Thailand’s resilience: the country has not experienced a credit rating downgrade by Moody’s since March 2003, when it was affirmed at Baa1, despite significant challenges such as the 2011 floods and the Covid-19 pandemic. S&P has also maintained its rating at BBB+.
Nonetheless, there have been three recent occasions when the rating outlook was revised downward. Each case saw a muted or even positive short-term reaction from the Stock Exchange of Thailand (SET):
- In December 2008 (S&P, stable to negative), the SET Index fell by 1.4% but rebounded within a week;
- In April 2020 (Moody’s, positive to stable), the SET Index gained 0.7% and rose a cumulative 1.16% over the following week;
- In April 2025 (Moody’s, stable to negative), the SET Index advanced 3.25% on the day and a cumulative 2.44% over the week.
Given these factors, Krungsri maintains a base-case view that a credit rating downgrade remains unlikely, especially as the current government continues to emphasize fiscal discipline, targeted policy measures, and investments designed to drive Thailand’s next economic growth phase.
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