Thailand Financial Sector Assessment Program : Fixed Income
The debt market in Thailand has made important strides since the financial crisis of 1997. The Thai government has made significant progress in building an orderly yield curve and is beginning to establish some benchmarks. However, more needs to be...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/452831468117867439/Thailand-Fixed-income-technical-note http://hdl.handle.net/10986/28231 |
| Summary: | The debt market in Thailand has made
important strides since the financial crisis of 1997. The
Thai government has made significant progress in building an
orderly yield curve and is beginning to establish some
benchmarks. However, more needs to be done if the government
is to achieve its objective of enhancing liquidity in the
market. In particular, liquidity in the secondary market
would be enhanced by reducing the frequency of auctions,
while increasing the size of each individual offering. Such
a change will require primary dealers to change their mode
of operation from effectively a broking operation to the
provision of greater underwriting and market making
services; consequently a review of the primary dealer system
is warranted. Nevertheless, prospects for development of the
government securities market will be constrained overall by
the likely limited financing need going forward, unless the
authorities can secure some additional flexibility to
restructure the existing portfolio or otherwise establish
more meaningful benchmarks. The corporate debt market
suffers from too few issuers of corporate debt and too
little diversity of debt offerings. This reflects, in part
the limited corporate need for long-term financing, the
ready availability of alternative financing by commercial
banks at competitive rates, and regulatory policies that
emphasize investor protection by imposing substantial
limitations on the ability of institutional investors to
purchase anything but investment grade debt, which
effectively precludes issuance of below investment grade debt. |
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