Thailand Says Rising Yields No Bar to $32 Billion Borrowing Plan
The government and the central bank are rolling out 1.9 trillion baht of emergency stimulus to counter a recession.
(Bloomberg) -- Thailand expects to accelerate the pace of borrowing for a 1-trillion-baht ($32-billion) stimulus program and isn’t concerned by a recent steepening in the sovereign-debt yield curve.
“It’s not that worrisome yet,” Patricia Mongkhonvanit, the director general of the Finance Ministry’s Public Debt Management Office, said in an interview in Bangkok on Wednesday. “We’re very careful on our offerings, as we don’t want to shock the market. We have so many tools to use.”
The government and the central bank are rolling out 1.9 trillion baht of emergency stimulus to counter a recession after the virus pandemic hurt Thailand’s traditional economic engines of tourism and trade.
That plan includes as much as 1 trillion baht of government borrowing, part of a deluge of bond issuance globally as countries try to limit the damage caused by the coronavirus outbreak.
One option is to raise some funds from overseas, Patricia said, adding talks with international organizations like the Asian Development Bank for loans may conclude this year. Foreign-currency bonds, for instance dollar-denominated debt, are being considered but officials have to take into account the cost and potential impact on the baht, she said.
“We can still manage with the liquidity we have locally,” Patricia said. “If funding needs surge, going overseas could be more appealing.”
The ministry has raised 260 billion baht so far of the planned 1 trillion baht, mostly from 170 billion baht of promissory notes and 50 billion baht in savings bonds. Another 40 billion baht came from a sale on Wednesday of bonds that mature in 2024.
The pace of borrowing is expected to pick up next month after the Cabinet approved additional steps to bolster domestic tourism and cushion the incomes of people affected by the economic slowdown.
The ministry may issue more Treasury bills in the third quarter and the central bank could scale back its offerings to avoid flooding the market, Patricia said.
“We’re in close talks with the Bank of Thailand,” she said, adding the ministry can choose other funding options if concern grows that short-term inflows are pushing up the baht and impeding the Thai economy.
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