Page 58 - Annual Report 2552

PDMO PUBLIC DEBT

MANAGEMENT
OFFICE

STRATEGY 2 : DEVELOPMENT OF THE DOMESTIC

BOND MARKET

The Ministry of Finance’s objective is to develop the domestic bond market to become an integral
part of the financial market, providing both government and private sector with an alternate source of

funding and investment. A committee has been set up to oversee primary operations including implementation
of initiatives to develop the domestic bond market which has in turn led to significant growth in the bond

market. The bond market grew from 11% of GDP in 1996 to 69% of GDP in 2009 and in comparison to
the previous year, the bond market grew at 19.8 %.

To achieve sustainable development in the domestic bond market, the Public Debt Man-
agement Office (PDMO) has initiated and implemented measures to ensure that the domestic bond

market continue to expand in terms of size and liquidity. These measures include 1) Issue Bench-
mark bonds with aim to enhance liquidity in the secondary market as well as to establish bench-

mark yield curve both in the short and long term; 2) Broaden the domestic bond international
investors base through the development and introduction of new products to the market. 3) Amend the

Public Debt Management Act to remove unnecessary constraints in order to add flexibility and efficiency
in debt management operations; and 4) enhancement of basic market infrastructrue.

Since the issuance strategies in 2008 has been highly successful, PDMO maintained core principles
and implemented a similar strategies for 2009, measures for the 2009 issuance program includes 1) Size

of Benchmark bonds must be sufficient for enhancing liquidity in the secondary market. 2) Maturities of
benchmark bonds corresponds to the demand of investors which includes maturities of 5, 10 , 15, 20 and

30 years. 3) Reduce the frequency of auction dates. It is also important to note that, the financial crisis
in 2009 reduced the returns by 200 basis points leading to a sudden increase in demands for short term

instruments. To ensure that these demands are met, PDMO introduced the following additional
measures including:

รายงานประจำาปี 2552 ANNUAL REPORT 2009 57