Government bond yields dropped for all tenors between end-September and end-December, with declines ranging from 33 basis points (bps) for the 7-year tenor to 66 bps for the 4-year tenor. The drop in yields was partly due to expectations of lower inflationary pressures. Yields, however, rose for most tenors between end-December and 15 March. The yield spread between 2- and 10-year tenors widened 7 bps between end-September and end-December, and increased further by 40 bps between end-December and 15 March. 

The outstanding size of the local currency (LCY) bond market in Thailand at end-December amounted to THB7.1 trillion (US$225 billion), rising 5.3% year-on-year (y-o-y) and 1.2% month-on-month (m-o-m), while falling 0.6% quarter-on-quarter (q-o-q). Total government bonds, which accounted for 81% of total bonds outstanding, increased 4.4% y-o-y and 0.9% m-o-m, but fell 1.4% q-o-q, to reach THB5.7 trillion. LCY corporate bonds outstanding were valued at THB1.4 trillion at end-December, up 9.1% y-o-y, 3.1% q-o-q, and 2.5% m-o-m.

The Bank of Thailand (BOT) announced in February that it had signed a memorandum of understanding with Bank Negara Malaysia to enter into a cross-border collateral arrangement to strengthen liquidity facility measures for financial institutions operating in both countries. The Ministry of Finance announced that it granted approval to seven foreign companies to sell LCY bonds totaling THB66 billion in Thailand between 1 January and 30 September. BOT was granted a Qualified Foreign Institutional Investors (QFII) license by the China Securities Regulatory Commission (CSRC) in December, allowing the central bank to invest in CNY-denominated bonds and stocks listed on the Shanghai and Shenzhen stock exchanges.