Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

The Thai Corona Crisis: Impact and Response

Thai Corona Crisis (May): HomeComing and Back to Business Themes

Thailand: Recession Will Be Severe, but Less so than the IMF/ADB Are Forecasting

Thai Corona Crisis (April): Bangkok and Phuket Become Ghost Towns!

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Macroeconomics

We initiate our coverage of Thailand’s sovereign credit (“BBB+”-rated). In this report, we review the country’s macroeconomic and institutional performance against its selected ASEAN peers including two “BBB”-rated countries, i.e., Indonesia and the Philippines, Malaysia (“A-“) and Vietnam (“BB”) to identify severe problems Thailand is facing, including the credit rating downgrade risk amid the COVID-19 outbreak.
Thailand is experiencing sharp contractions in its current account surplus and GDP, while its fiscal deficit and public (and external) debt are increasing due to the direct impact of the COVID-19 outbreak on exports, dropping tourism arrivals and domestic economic activity, as well as the government’s recovery packages in response to the pandemic. However, Thailand’s historical effective (and prudential) monetary and fiscal policies as shown in low inflation, high foreign reserve coverage and the enactment of the Fiscal Responsibility Act in April 2018, have provided the country with the much-needed room for policy manoeuver, including running a huge fiscal deficit and accommodative monetary policy, to counter external and internal shocks, in our view. These strengths are balanced by its underperformance relative to peers in some selected political and institutional indicators.
In March and April, all the three major rating agencies (e.g. S&amp;P, Moody’s and Fitch) revised Thailand’s “BBB+/Baa2“ sovereign credit rating outlook to stable from positive on the evolving impact of the global COVID-19 outbreak on Thailand's economy through its tourism sector as well as lingering uncertainty in Thailand's political environment following the country's transition to a civilian rule last year that could affect the country’s formation and implementation of COVID-19 relief and support schemes.
While such outlook revision was, in our opinion, warranted at the time, the Thai government’s THB2.2trn three-phased economic support schemes has reduced such a political risk and uncertainty. Since the general election last year, there have been non-stop events which weakened opposition parties and, in effect, strengthened the government majority.
The government’s early strategic shift to rely less on politicians and more on medical doctors and civil servants in coping with COVID-19 has received applauds.  The confidence of the government points to a more certain economic landscape for the country amid the pandemic, in our judgment. Consequently, we do not think Thailand’s ratings are under a downgrade risk at least in 2020.

We initiate our coverage of Thailand’s sovereign credit (“BBB+”-rated). In this report, we review the country’s macroeconomic and institutional performance against its selected ASEAN peers including two “BBB”-rated countries, i.e., Indonesia and the Philippines, Malaysia (“A-“) and Vietnam (“BB”) to identify severe problems Thailand is facing, including the credit rating downgrade risk amid the COVID-19 outbreak.
Thailand is experiencing sharp contractions in its current account surplus and GDP, while its fiscal deficit and public (and external) debt are increasing due to the direct impact of the COVID-19 outbreak on exports, dropping tourism arrivals and domestic economic activity, as well as the government’s recovery packages in response to the pandemic. However, Thailand’s historical effective (and prudential) monetary and fiscal policies as shown in low inflation, high foreign reserve coverage and the enactment of the Fiscal Responsibility Act in April 2018, have provided the country with the much-needed room for policy manoeuver, including running a huge fiscal deficit and accommodative monetary policy, to counter external and internal shocks, in our view. These strengths are balanced by its underperformance relative to peers in some selected political and institutional indicators.
In March and April, all the three major rating agencies (e.g. S&amp;P, Moody’s and Fitch) revised Thailand’s “BBB+/Baa2“ sovereign credit rating outlook to stable from positive on the evolving impact of the global COVID-19 outbreak on Thailand's economy through its tourism sector as well as lingering uncertainty in Thailand's political environment following the country's transition to a civilian rule last year that could affect the country’s formation and implementation of COVID-19 relief and support schemes.
While such outlook revision was, in our opinion, warranted at the time, the Thai government’s THB2.2trn three-phased economic support schemes has reduced such a political risk and uncertainty. Since the general election last year, there have been non-stop events which weakened opposition parties and, in effect, strengthened the government majority.
The government’s early strategic shift to rely less on politicians and more on medical doctors and civil servants in coping with COVID-19 has received applauds.  The confidence of the government points to a more certain economic landscape for the country amid the pandemic, in our judgment. Consequently, we do not think Thailand’s ratings are under a downgrade risk at least in 2020.

Thailand: Political Stability Matters