Moody’s maintains Thai government bonds rating at Baa1, stable outlook

BANGKOK, April 28 (TNA) - The Ministry of Finance's Public Debt Management Office says that Moody's Investors Service has maintained the Thai government bonds rating at Baa1, a stable outlook, thanks to the government's strong financial position. Public Debt Management Office Director-General Chularat Suteethorn told journalists on Monday that Moody’s reasons low funding costs and a favorable debt structure, as well as limited external vulnerabilities and, in many respects, Thailand's credit metrics remain well positioned, compared with its immediate rating peers. The US-based international credit rating agency warned, however, that prolonged domestic political problems could affect the credit rating of the Thai government bonds. Besides, if the domestic political deadlock continued into the second half of this year or if the domestic political strife escalated and resulted in protracted negative consequences on the domestic tourism or manufacturing sectors, such developments would be credit negative. A significant rise in government funding costs or a sharp deterioration in the balance of payments position and a significant loss of official international reserves would also be credit negative. According to Moody's, anti-government protests which started in late October 2013 are negatively affecting Thailand's economic growth outlook for 2014 and 2015, and could, over time, erode its key credit strengths. Moody's projected that Thailand's gross domestic product (GDP) growth rates should, thus,slow to less than 3 per cent on average for both years, lower than its average 3.8 per cent growth over the past 10 years. In particular, the country's GDP growth in 2014 and 2015 should be negatively affected by delayed public and private investment and dampened consumer confidence. Meanwhile, the Thai Industries Sentiment Index (TISI) made a new low in 57 months in March 2014 due to prolonged political problems, while the Manufacturing Production Index (MPI) declined by 7 per cent in the first quarter of this year. Suphan Mongkholsuthee, Chairman of the Federation of Thai Industries (FTI), told reporters that a survey on 42 industrial groups in March 2014 found the TISI at 84.7 points, down from 85.7 in February, based on overall purchase orders, sales, production and operational results. The FTI chair cautioned that the prolonged domestic political problems would also affect Thailand's long-term competitiveness and participation in the ASEAN Economic Community (AEC), set to be formed by next year, and local business operators demanded that the government stimulate the national economy.(TNA)