Jindarat Viriyataveekul, Director-General of the Public Debt Management Office, disclosed that the PDMO has revised its strategy for issuing government bonds in fiscal year 2027, focusing on short-term instruments and selecting appropriate debt tenors, after the yield on 10-year US Treasury bonds rose to 5%, which affects fundraising costs. The short-term instruments ready for use include treasury bills, term loans, and promissory notes, while long-term instruments will have tenors of about 3 to 5 years, and newly issued bonds are expected to trend toward shorter tenors. The public debt management plan for 2027 submitted to the Cabinet comprises three frameworks: a new borrowing plan of approximately 1.26 trillion baht, a debt management plan for existing debt of approximately 1.9 trillion baht, and a debt repayment plan of approximately 580 billion baht. The public debt-to-GDP ratio is expected to be about 68% at the end of the current fiscal year, rising to just over 69% at the end of fiscal year 2027, and peaking in fiscal year 2028 at just over 69%, but still within the fiscal discipline framework of no more than 70%. The government's existing debt portfolio is structured with as much as about 89% in long-term loans, limiting refinancing and interest rate volatility risks to the new borrowing segment. The government's current average borrowing cost is about 2.6%. Meanwhile, the sustainability bond market continues to receive a good response, with the Neighboring Countries Economic Development Cooperation Agency being the first public organization to issue a Social Bond worth 1 billion baht, with a 10-year tenor and a fixed interest rate of 3.13%, distributed by Government Savings Bank and supported by the Asian Development Bank in developing the framework. The government has now issued a cumulative total of approximately 700 billion baht in sustainability bonds.
The article states the 10-year US Treasury yield rose to 5%, which is the yield itself rising (bond price falling) and is the driver forcing Thailand's PDMO to shift to short-term borrowing.
