Education Corner

About Thai Bond Market

The Thai Domestic Debt Market - Promoting Foreign Investment
The Thai debt market has exhibited significant development since the late 1990s as a tool for funding of central government.Since then, Thai debt market has been also grown and utilized as a major source for domestic fund raising not only by the central government and state-owned enterprises but alsoby many corporates, as well as a means of liquidity management by the central bank. This source of financing is a basis for mobilizing investment by the growing institutional investor base.
A significant development to the financial environment in Thailand has been the emergence of a domestic debt market. While the commercial banking sector remains an important source for financing, the distribution trend between bank, stock market, and bond market funding are increasingly more balanced. Since 1997 the debt markets have grown from 12% to 76% of Gross Domestic Product and market capitalization over the last decade has grown in outstanding value to THB 10.86 trillion ($310.44 bln), as of December 2016, compared to THB424.4bln in 1995. At the end of December 2016 bank loans and stock market capitalization represented 95% and 105% of GDP, respectively.
Breaking down of the Thai Debt Market,Government bonds and T-bills currently account for 38% of total outstanding, 29% is Bank of Thailand bonds, 7%is state-owned enterprise (SOE) bonds, and corporate bonds account for 26% at the end of 2016.

Issuers in the Thai Domestic Debt Market
Government Debt Instruments
1. Treasury Bills (T-Bills) are short-term debt instruments issued by the Public Debt Management Office (“PDMO”)- Ministry of Finance with maturities less than 1 year. The bills are sold on a discount basis.
2. Government Bonds are medium to long-term debt instruments issued by the PDMO- MoF, which consist of two types; Loan bonds (LB) and Savings Bonds (SB). Loan Bonds captures the majority of the market as they are issued for financing budget deficits and to fiscalise the losses of the central bank’s financial restructuring unit, the Financial Institutions Development Fund (“FIDF”). Savings Bonds are issued by the PDMO to provide households with an alternative source of savings.
3. State Agency (SA) or Bank of Thailand (BoT) Bills and Bonds are issued by the central bank for the purposes of liquidity management and bond market development. The terms are less than one year for Bills and 2-year maturities for BoT Bonds.
The above three types of securities are eligible for liquidity reserve management.
The above three types of securities are eligible for liquidity reserve management.
4. State Owned Enterprise (SOE) Bonds are medium to long-term debt instruments issued by State Owned Enterprises. These can be categorized into 2 types; guaranteed by the Ministry of Finance and non-guaranteed, guaranteed bonds account for 72% of total. Current restrictions stated that government guaranties cannot exceed 10 % of the total annual budget expenditure. MoF-guaranteed bonds are eligible for liquidity reserve requirement.
Private Sector and Multilateral Instruments
1. Corporate Debt includes Straight bonds, Floating Rate Notes (FRN), Amortizing bonds, and Convertible bonds. There are increasingly more diverse design features being offered in recent years, such as Securitized Debt.
2. Commercial Paper includes Bills of Exchange (B/E), Promissory Notes (P/N), and Short-term Debenture. These instruments are typically less than 1-year in time-to-maturity
3. Foreign Bonds have been recently issued in the Thai Baht domestic debt market by International Financial Institutions (“IFIs”) consisting of the Asian Development Bank and the Japanese Bank for International Cooperation. While the outstanding value of IFI issues are comparatively small at THB13.5bln, it does represent a growing and more varied issuer base for the institutional investors to choose from.
Issuing Process
Government T-bills and bonds as well as central bank instruments are auctioned at the Bank of Thailand on a competitive and multiple prices based. Also, the Public Debt Management Office/MoF uses “reopenings” of outstanding issues to build up sizable benchmarks along the yield curve. Institutions who are members of the BoT’sBahtNET payment system are eligible to tender bids in the auctions. All issuance terms and sizes are pre-announced and can be found on the ThaiBMA’s website. Foreign investor access to auctions would be best served by the domestic or international commercial bank holding their account in Thailand.
State Owned Enterprise Debt is auctioned at the Public Debt Management Office in a Dutch or single-pricebased typically to a sole underwriter as the issuance sizes are relatively small compared to government and BoT debt. Similarly, a foreign investors financial institution holding their account could be a potential underwriter and distributor of SOE debt.
Auction Schedule*
Issuer Auction Date Auction Types
MoF: T-Bills (TB) Mondays Multiple Prices
BoT: Central Bank Bills (CB) and BOT Bonds (BOT) Tuesdays Multiple Prices
MoF: Government Bonds (LB) Wednesdays Multiple Prices
SOE Bonds Thursdays Single Price
* This is not to indicate auctions take place these allotted days every week.
Corporate debt and foreign debt is subject to Securities and Exchange Commissions (“SEC”) approval and disclose requirements. Credit ratings are required for all bond offerings with the exception applied to those offered to not more than 10 investors, or in the amount not exceeding THB100 mln or to creditors for debt restructuring. Private sector debt comes to market mostly by public offerings while small issuers such as Bills of Exchange are typically private placement.
Clearing and Settlemen
Nowadays, all Government bonds, SOE bonds, and corporate bondsare cleared and settledby the Thai Securities and Depository Co. Ltd (“TSD”), a subsidiary of the Stock Exchange of Thailand (“SET”). Contrary to the past, all government and SOE debt cleared and settled at the Bank of Thailand. The BoT continues to maintain the payment system and registrar for government, BoT, and SOE-guaranteed debt. The depository and registrars for corporate debt is largely with 8 local financial institutions with the TSD acting as depository for government, BoT, and SOE debt.
Trading Mechanism for Debt Instruments
The majority of secondary market trading takes place as anOver-the-Counter (“OTC”) market. Dealers (financial institutions holding debt securities license granted by the SEC) are required to report all bond transactions to ThaiBMA. We monitor, compile, and disseminate prices to the public on a “nearly” real-time basis. Prices disseminated by ThaiBMA are used as market reference for Mark-to-Market (MTM).
Bonds are traded on price or yield quotations with up to 6 decimal points. Prices are usually quoted by 'clean' basis as a percentage to par value with 6 decimal points. Market convention for price/yield formula is actual/365 basis.
Market Intermediaries and Primary Dealers
Currently, there are 53 dealers and members, of the Thai BMA, consisting of 14 Thai commercial banks, 6 foreign commercial banks, and 33 securities companies at the end of 2016. These dealers with licenses from the SEC are free to trade but in general there are sector differences such as commercial banks being active underwriters of the wholesale market based on capital and as members of the central banks payment system while securities companies are looking to fill a niche in the corporate market.
Primary Dealers are financial institutions appointed by the BoT to be the central bank’s counterparties in open market operations. They are responsible to be market makers for government securities and to participate in the government securities auctions. In addition, primary dealers are also obliged to submit reference yields on government securities to ThaiBMA at the end of each day
List of Primary Dealers (announced on 18 September 2014)
ลำดับที่ ชื่อองค์กร
1Bangkok Bank PLC.
2Krungthai Bank PLC.
3Kasikorn Bank PLC.
4JPMorgan Chase Bank
5Citibank, N.A.
6CIMB Thai Bank PLC.
7Deutche Bank AG Bangkok Branch
8TMB Bank PLC.
9Siam Commercial Bank PLC.
10 BNP Paribas, Bangkok Branch
11Standard Chartered Bank (Thai) PLC.
12KGI Securities (Thailand) Limited
13Bank Of Amerca, National Association
14The Hongkong and Shanghai Banking Corporation Ltd.
Investors in the Thai Domestic Market
The institutional investor group, which are made up by pension funds, provident funds, insurance companies and mutual funds, is enjoying continued growth with assets as of Jun. 2006 at THB 2.031trln compared to THB594bln in 1998. The commercial and state owned banks as well as corporate and retail investors are equally significant holders of domestic debt.
Rating Agencies
Thailand has two credit rating agencies, the Thai Rating and Information Service Co. Ltd. (“TRIS Ratings”)who covers financial institutions, state enterprises and corporate issuers.Another one isthe Fitch ratings (Thailand) Ltd., the international agency who covers international and Thai issuers
The Bank of Thailand (BoT) supervises the operation of banking and finance businesses while the Securities and Exchange Commission (SEC) supervises the primary and secondary market for securities business. The issuance and offering of securities are governed by the Securities and Exchange Act 1992 (B.E. 2535).
The Thai Bond Market Association, under SEC regulation, acts as a Self-Regulatory Organization (“SRO”) with market surveillance powers in cooperation with the SEC’s enforcement and examination functions. The Thai BMA is responsible for establishing market convention, best practices, and code-of-conduct. SEC regulation stipulates that all dealer transactions are to be reported to the Thai BMA on a timely basis, currently 30-minutes of trade, for the Thai BMA to disseminate market information on its website.
To promote the level of professionalism and to ensure the fair and orderly manner of the bond market, the SEC regulation requires all bond traders to register with Thai BMA. In order to register, traders have to satisfy the set criteria and pass a registered trader examination administered by the Thai BMA. Thai BMA will be responsible for ensuring that trading practice of registered traders follows the established Ethics and Code and Conduct for the bond market.
Type of Bonds Resident Investors Nonresident Investors
Interest Income Capital Gains Interest Income Capital Gains
Government & Quasi
Government Bonds
(including SFIs)
Individual: 15% withholding tax (recipients can choose to include in calculation for the purpose of personal income tax)
Corporate: 1% withholding tax
Individual: 15% withholding tax (for zero coupon instruments, if 15% is prepaid, capital gains is tax exempt)
Corporate: Liable for corporate income tax
Individual: Withholding tax-exempt
Corporate: Withholding tax-exempt
Individual: Withholding tax-exempt
Corporate: Withholding tax-exempt
Corporate Bonds Individual: 15% withholding tax recipients can choose to include in calculation for the purpose of personal income tax)
Corporate: Liable for corporate income tax.
Individual : 15% withholding tax except for zero coupon bonds. And can choose not to include in the year end income tax.
Corporate : - No withholding tax - Exempt for Mutual Fund - Included in corporate income tax
Individual: 15% withholding tax
Corporate: 15%withholding tax
15% withholding tax except for zero coupon bonds and bonds issued by government agencies
Corporate : 15% withholding tax except for bonds issued by government agencies
Supranational Bonds Waived Waived Waived Waived
Securitized Bonds Individual & Corporate: 15% withholding tax upon debenture interest payment N/A Individual & Corporate: 15% withholding tax upon debenture interest payment N/A
Revenue Department Tax Treaties Link
**Given possible fiscal policy changes it is advisable to consult an investment and or tax specialist prior to any investment action.
Thai Bond Market Association
The ThaiBMA is mandated, with full support of the governing agencies, as the sole information center and Pricing Agency for the Thai domestic bond market. Wedisseminate primary and secondary market information through our website, consisting of trading information, bond features, reference yield and relevant market news and regulatory issues.
On duty of Pricing Agency, the ThaiBMA provides pricing data; from trade execution and dealer mandatory closing quotations and model yield for mark-to-market purposes for mutual and provident investment funds to calculate their NAV on a daily basis as required by SEC regulations. In the cases of illiquid bonds with infrequent trade the BMA’s model yield offers pricing for investors to calculate their value.
On duty of Bond Registration, all types of debt securities issued by government, SOE, State Agency, and corporate sectors are required to register with the ThaiBMA. Registration is one of the center points of the ThaiBMA’s information capabilities and pricing models.
ThaiBMA provides general information regarding debt instrument through our website : The in-depth information is also available for those who need informative source for Thai bond investment at our iBond which required subscription. For those who are interested the online subscription is available or you may contact the Association & Member Department : Tel. (662) 257-0357 Ext. 401,403 or E-mail: