Thailand’s Bonds Advance as IMF Cuts Growth Outlook; Baht Rises

Thailand’s government bonds rose after the International Monetary Fund cut its global growth forecast, citing Europe’s worsening debt crisis and weaker U.S. expansion. The baht strengthened.

The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, compared with a July prediction of 3.5 percent, the Washington-based lender said today. International investors purchased $455 million more local sovereign notes than they sold this month through yesterday, according to data from the Thai Bond Market Association.

“There’s good appetite for assets in Asia where the growth is relatively stronger than developed nations, providing the room for currencies to gain,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “But investors don’t want to take risks aggressively and the funds are flowing more to bonds rather than stocks, supporting the regional debt markets.”

The yield on the 3.25 percent notes due June 2017 dropped two basis points, or 0.02 percentage point, to 3.28 percent as of 8:32 a.m. in Bangkok, according to data compiled by Bloomberg.

The baht climbed 0.1 percent to 30.64 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.27 percent.

Asia’s developing economies will expand 6.7 percent this year, compared with a July estimate of 7.1 percent, according to the IMF. The Asian Development Bank and the World Bank also lowered their growth estimates for the region this month.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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