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Analysts at the Australian and New Zealand Banking Group (ANZ)  offer their thoughts on Thailand’s new measure to start the normalization of the Loan Bond (LB) issuance in the first quarter.

Key Quotes:

“The Public Debt Management has released the Q1 FY20 Loan Bond (LB) issuance calendar. Despite some uncertainties from ongoing FY20 budget deliberation, we expect net LB supply to normalize from exceptionally low levels in FY19.

Demand, and not supply, has in the past been a more dominant driver of LB curvature. Near term, we expect the rise in supply to meet stronger demand, following a 4-week issuance break since the last LB issuance on 14 September, and in light of the constructive macro backdrop.

For benchmarked investors, we recommend positioning further out in the 30-50Y segment of the curve and in the 0-5Y segment to maintain a neutral duration. The expected rise in LB supply in the coming months may provide better entry opportunities into the 10-20Y segment.”