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Thai Five-Year Bonds Gain on Inflows, Final Sale; Baht Falls

Dec. 20 (Bloomberg) -- Thailand’s sovereign notes rose, snapping a four-day decline, after overseas investors bought the most debt in more than two weeks yesterday before the final bond sale of 2012. The baht declined.

The Bank of Thailand sold 30 billion baht ($980 million) of securities due in 2014 today and will auction short-term bills on Dec. 25, according to a schedule compiled by Bloomberg. Foreign funds bought $190 million more of the nation’s government debt than they sold, data from the Thai Bond Market Association show.

“Yields will continue to go lower especially because of the New Year, when foreign inflows tend to pick up seasonally,” said Rohit Arora, a Singapore-based fixed-income strategist at Barclays Plc. There are market expectations that there’ll be no supply in the first two weeks of next year, he said.

The yield on the 5.125 percent bonds due March 2018 dropped three basis points, or 0.03 percentage point, to 3.28 percent as of 3:41 p.m. in Bangkok, according to data compiled by Bloomberg. The yield has increased two basis points this year.

The treasury issued 19 billion baht of 2017 debt yesterday at an average yield of 3.19 percent and 8 billion baht of notes maturing in 2041 at 4.3 percent. Five-year securities in the U.S. yield 0.76 percent, while those in Japan pay 0.17 percent.

The baht declined 0.1 percent to 30.63 per dollar in Bangkok, according to data compiled by Bloomberg. The currency has advanced 3 percent this year. One-month implied volatility, a measure of expected exchange-rate swings used to price options, was steady at 3.91 percent. The rate has dropped 261 basis points this year.

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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