Thai 10-Year Bonds Have Best Week Since October as Supply Drops

Thailand’s 10-year bonds had the best week in two months on optimism demand for existing debt will rise as the government hasn’t scheduled any issuance over the next month.

Funds based overseas bought $499 million more of the nations’ securities than they sold this week through yesterday, data from the Thai Bond Market Association show. The Bank of Thailand sold 30 billion baht ($980 million) of notes due 2014 yesterday, the final bond sale of the year. The baht strengthened this week.

“There’s no issuance in the next two weeks and there are market expectations there’ll be no supply in the first two weeks of January as well,” said Rohit Arora, a Singapore-based fixed- income strategist at Barclays Plc. “Thailand bond yields are very attractive.”

The yield on the 3.625 percent government bonds due June 2023 fell five basis points, or 0.05 percentage point, this week to 3.56 percent as of 4:22 p.m. in Bangkok, the most since the five days ended Oct. 19, according to data compiled by Bloomberg. The rate fell one basis point today and has increased 16 basis points in 2012.

The baht rose 0.1 percent this week to 30.61 per dollar and was little changed from 30.62 yesterday, according to data compiled by Bloomberg. It appreciated 3.1 percent this year.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, was unchanged today and this week at 3.91 percent. It fell 261 basis points in 2012.

Trading volume is subdued because many investors are away for the seasonal holidays, Bank of Thailand’s Senior Director Alisara Mahasandana told reporters yesterday.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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

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