Thailand’s default risk soars

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Thai ralliesThe risk of Thailand defaulting on its debt is the highest since August 2013 as anti-government protests prompt money managers to sell the country’s assets, the Bangkok Post reported.

The cost of protecting Thailand’s debt soared after investors including Wells Fargo Inc pulled more than $4 billion from Thai stocks and bonds since October 31, as rallies clogged up Bangkok roads and clashes left nine dead with 550 injured. Pacific Investment Management Co, Goldman Sachs Group Inc and Kokusai Asset Management Co reduced debt holdings before protests first erupted in late October, regulatory filings show.

Kokusai, Japan’s biggest mutual fund manager with $36 billion of assets, cut its Thai bond holdings in 2013 and will keep its existing stake for now, the investment firm said.

Credit-default swaps insuring Thai debt against non-payment for five years rose to 153 on January 14 in New York, the highest level since August 28, 2013. The cost of protecting Thailand’s debt may reach 200, the highest since November 2011, from 150 on January 17, according to Nordea Markets, a unit of northern Europe’s biggest financial group, which had about $310 billion of assets under management as of September 30.

Global funds have sold $2.8 billion more local stocks than they bought and a net $1.4 billion of bonds since October 31, data from the stock exchange and the Thai Bond Market Association show. The baht fell 5.2 per cent in the period and touched 33.148 per dollar on January 6, the weakest since 2010, while the SET Index of domestic shares dropped 10 per cent.

The Bank of Thailand will lower its benchmark one-day repurchase rate to 2 from 2.25 per cent on January 22, according to 14 of 21 economists surveyed by Bloomberg. The central bank delivered a surprise 25-basis point cut at its last meeting on November 27.

The monetary authority has lowered its 2014 growth projection to about 4 from 4.8 per cent, saying the unrest will hurt investment and business confidence. Thailand’s finance ministry on Jan 16 cut its forecast for the second time in a month, reducing it to 3.1 per cent after cutting to 4 per cent from 5.1 per cent on December 26.

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Reading Time: 2 minutes

The risk of Thailand defaulting on its debt is the highest since August 2013 as anti-government protests prompt money managers to sell the country’s assets, the Bangkok Post reported.

Reading Time: 2 minutes

Thai ralliesThe risk of Thailand defaulting on its debt is the highest since August 2013 as anti-government protests prompt money managers to sell the country’s assets, the Bangkok Post reported.

The cost of protecting Thailand’s debt soared after investors including Wells Fargo Inc pulled more than $4 billion from Thai stocks and bonds since October 31, as rallies clogged up Bangkok roads and clashes left nine dead with 550 injured. Pacific Investment Management Co, Goldman Sachs Group Inc and Kokusai Asset Management Co reduced debt holdings before protests first erupted in late October, regulatory filings show.

Kokusai, Japan’s biggest mutual fund manager with $36 billion of assets, cut its Thai bond holdings in 2013 and will keep its existing stake for now, the investment firm said.

Credit-default swaps insuring Thai debt against non-payment for five years rose to 153 on January 14 in New York, the highest level since August 28, 2013. The cost of protecting Thailand’s debt may reach 200, the highest since November 2011, from 150 on January 17, according to Nordea Markets, a unit of northern Europe’s biggest financial group, which had about $310 billion of assets under management as of September 30.

Global funds have sold $2.8 billion more local stocks than they bought and a net $1.4 billion of bonds since October 31, data from the stock exchange and the Thai Bond Market Association show. The baht fell 5.2 per cent in the period and touched 33.148 per dollar on January 6, the weakest since 2010, while the SET Index of domestic shares dropped 10 per cent.

The Bank of Thailand will lower its benchmark one-day repurchase rate to 2 from 2.25 per cent on January 22, according to 14 of 21 economists surveyed by Bloomberg. The central bank delivered a surprise 25-basis point cut at its last meeting on November 27.

The monetary authority has lowered its 2014 growth projection to about 4 from 4.8 per cent, saying the unrest will hurt investment and business confidence. Thailand’s finance ministry on Jan 16 cut its forecast for the second time in a month, reducing it to 3.1 per cent after cutting to 4 per cent from 5.1 per cent on December 26.

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