Foreign investors net buy THB 26 billion in Thai bonds; focus on second-half global rate pressure

Overview of foreign capital in the Thai bond market

Foreign investors have net bought (Net Inflow) about THB 26 billion in the Thai bond market since the start of the year, despite monthly swings in fund flows due to war and global interest-rate factors.

• Since the start of 2026, foreign investors have net bought about THB 26 billion in the Thai bond market, despite monthly volatility.
• Foreign capital is highly mobile; March saw net outflows on war concerns, and outflow signs reappeared in June.
• The second-half trend faces higher risk from external factors, especially the direction of global interest rates, which could pressure the market.
• Analysts worry that if the Fed continues raising rates, it could push up global bond yields and affect capital flows into Thailand.

Comparison of Thai and U.S. bond yields and their impact on capital flows

In 2026, the Thai bond market continues to face volatility from external factors, especially pressure from war, inflation, and global interest-rate trends, which has driven recent bond yields higher. At the same time, foreign capital has still posted net inflows of about THB 26 billion into the Thai bond market since the start of the year.

Ariya Tiranaprakit, Managing Director of the Thai Bond Market Association (ThaiBMA), said in an interview that the Thai bond market as a whole remained volatile this year, especially after the war situation in March 2026 pushed Thai bond yields sharply higher before they gradually eased. Compared with the end of last year, Thai bond yields rose by about 50 basis points due to inflation pressure and moves in the U.S. Treasury market. However, current yield levels are not yet high enough to affect financing costs for the government and the private sector.

At present, the Thai 10-year government bond yield is around 2.1%–2.2%, while the U.S. 10-year Treasury yield is about 4.5%, leaving a spread of roughly 2%. Although Thai bond yields have risen with global market trends, they remain at manageable levels.

This year, foreign fund flows have fluctuated with global events. In March, war concerns triggered net selling; in April, about THB 5.1 billion flowed back in; in May, inflows rose to about THB 21.2 billion; and in June, outflow signs reappeared.

From the start of the year to date, foreign capital flows in the Thai bond market are still positive, with net inflows of about THB 26 billion. Foreign holdings of Thai bonds also total about THB 950 billion.

The corporate bond market has clearly recovered. Issuance in the first quarter shrank by about 15% due to war concerns and global market volatility, but large companies gradually returned to the funding market, bringing cumulative corporate bond issuance to about THB 371 billion, close to last year's THB 378 billion.

Investment strategists point out that more worrying signs began to appear in the Thai bond market in the first half of the year, with foreign fund inflows slowing significantly and net inflows year to date down to only THB 26.329 billion. Latest data show foreign investors have already net sold more than THB 19.665 billion, reflecting a shift in fund flows, while last year still saw net buying of more than THB 72 billion.

In addition, the market is facing a distorted yield curve, as buying in short-term bonds has pushed yields down, while selling in 10- to 30-year long-term bonds has driven yields higher. This could hurt the private sector, especially companies that need to issue long-term corporate bonds, because they may face higher financing costs and greater difficulty raising funds.

Overall, foreign capital flows into Thailand's stock market remained positive in the first half, while net inflows into the bond market were about THB 26 billion, showing that the Thai market still attracts foreign attention, despite renewed selling pressure starting in June 2026.

In bonds, funds poured in heavily at the start of the year, then turned to outflows in March 2026 due to the war, flowed back in during April-May, and turned to outflows again in June, pulling the cumulative balance down to about THB 26 billion.

However, risks are rising in the second half because the Fed may restart rate hikes, which could push up global bond yields and affect bond fund flows and investor sentiment toward risk assets.