The bond trading this week dropped sharply to Baht 19,709.71million, comprising Baht 19,709.10 million of outright transactions and Baht 0.61 million of financing transactions. The daily average declined 33.22 per cent to Baht 4,927.43 million from Baht 5,902.5 million last week. Government bonds accounted for 47 per cent of the total, with the three most heavily traded issues being LB06DA (12.5 per cent, LB08DA (5.8 per cent) and LB05OA (5.2 per cent). Treasury bills accounted for as high as 38 per cent or Baht 7,494.6 million as investors were waiting for more information about new FIDF bonds. FIDF bonds accounted for 5.8 per cent or Baht 1,135.3 million and state enterprise bonds 3.9 per cent or Baht 767.66 million.

 

The bond market this week was volatile. There were only 4 working days so the volume was low. Yields on government bonds rose in the middle of the week when there was a meeting of the FIDF board on the plan to issue Baht 320 billion of bonds. However, there was no clear resolution, leading to profit taking sales by institutional investors. When the bidding of EGAT bonds with terms of 6,7,8 and 10 years came out low with premium of 12-23 bps, yields on government bonds dropped. On Friday, the yields dropped sharply following the announcement by the Bank of Thailand postponing the issuance of FIDF bonds until after the bill on public debt administration was passed into law, which might take 6 months.

 

Overall, yields on bonds with 1-2 years to maturity declined 3 bps, those on bonds with 3-7 years to maturity dropped 5-7 bps and those on bonds with 10 years to maturity fell 2-5 bps. Comparing yields on bonds with 2, 5 and 8 years to maturity, the medium term bonds were most attractive. The spread of the yields on bonds with 2 and 5 years to maturity was tending downward with a resistant level at 130 bps. Yields on long term bonds were likely to be stable due to pressure from new supplies which mostly would be with a term of 6-10 years.

 

For FIDF bonds, the demand was strong for FIDF031A and FIDF034A for using as liquidity reserve, causing yields to drop sharply, with premium of about 2-6 bps. Yields on other issues also declined in line with those on government bonds. Yields on state enterprise bonds also dropped sharply, with premium of about 10-20 bps.

 

Trading volume of corporate debentures was thin. Issues with attrative yields compared with Mod. Duration included TAC05OA (+274bps/A-), SPL055A (+271 bps/BBB+) and ACUMEN#1 (+221 bps/BBB+). Trading volume accounted for 5.7 per cent of the total, or Baht 1,125 millon, with the three most active issues being BANPU064A, GECAL#2 and TMB#4