Thai Bond Market

Thai bond market has developed continuously together with the stock market of the country. The Securities and Exchange Commissions (SEC) has realized the importance of the secondary market for bond transaction and let the Association of Securities Companies (ASCO) and bond dealers to establish the Bond Dealers Club (BDC) in November 1994 under the ASCO structure to be the secondary market for debt securities. The BDC was upgraded to 'The Thai Bond Dealing Centre (Thai BDC)' in April 1998 after it was granted the 'Bond Exchange' license from the SEC. The Thai BDC goals are to provide an environment for fair and secure trading, to monitor trade and to disseminate information on the secondary bond market. The Thai BDC also functions as a self-regulatory organization (SRO) and has implemented a number of standards and conventions for bond trading.

The Thai bond market has grown rapidly in recent years after the 1997's economic crisis. To help support cash-strapped financial institutions, in June1998 the government issued government bonds for the first time in the decade. The total amount of government bonds issued under this program was THB 500 billion and this has opened a new era for the Thai bond market. The government continued to issue bonds since then with the primary objective to finance budget deficit resulted from the crisis. The substantial amount of new government bonds coupled with successively downtrend of interest rates have contributed to the robust of the bond market as evidenced by a significant increase in both market size and trading volume. The outstanding value of total bond market increased from THB 547 billion in 1996 to 498 issues worth THB 1,507 billion at the end of 2001. Trading volume in the secondary market rose from a daily average of only THB 822 million in 1996 to THB 6,472 million in 2001.