Thai Bonds Drop on Oversupply Concern Before Sale; Baht Steady

Thailand’s government bonds dropped for a second day after the finance ministry said it would sell more debt due in 2027 to finance its budget deficit. The baht was little changed.

Five-year yields rebounded yesterday from a six-week low as the ministry announced it would offer an extra 8 billion baht ($258 million) of December 2027 securities at a sale today. The notes were first sold in February to yield 3.7745 percent. Sales of 10- to 50-year debt are also scheduled in May and June. The baht touched 31.07 per dollar yesterday, the weakest level since April 5.

“The market is a bit bearish, especially for long-end notes, due to supply pressure in the coming months,” said Worapoj Peerawit, a bond trader at CIMB Thai Bank Pcl in Bangkok. “Foreigners are still on selling mode due to recent currency weakness.”

The yield on the 3.25 percent bonds due June 2017 rose two basis points, or 0.02 percentage point, to 3.53 percent as of 9:28 a.m. in Bangkok, according to data compiled by Bloomberg. The yield reached 3.49 percent on April 23, the lowest level since March 12.

The yield on the existing 2027 notes was steady at 4.05 percent. Barclays Plc advised bidding for the securities at 4.05 percent to 4.10 percent at the auction, citing supply pressure, according to a research note to clients released yesterday.

The baht traded at 30.96 per dollar, versus 30.97 yesterday, according to data compiled by Bloomberg. It has declined 0.4 percent this month. The baht’s one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.52 percent, Bloomberg data show.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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