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04/01/2014

A comment on an S&P report.

There has always been political instability in Thailand and that has always been taken into account by the markets. This time will be no different inn my view. It will be watched but the situation will be kept in perspective. I suspect many wealthy Thais are doing what they always do in similar circumstances. Sell Thai stock, buy foreign currency. Reverse later. Bear that in mind when reading S&P’s views. Their view certainly has logic. 

“Based on a report by the Public Debt Management Office, S&P has given Thailand ratings of BBB+ and A-2 for its long-term and short-term foreign currency bonds respectively while local currency ratings are at A- for long-term bonds and A-2 for short-term. The country’s credit outlook is also kept at stable, and the long- and short-term ASEAN regional scale ratings are standing at axAA and axA-1 respectively.

S&P indicated that Thailand’s public debt was still relatively low despite the debt burdens incurred by the government’s various stimulus programs. The public debt is projected to account for 26% of the GDP in the next three years.

Nonetheless, S&P voiced concerns over uncertainty in Thai politics, saying it had been the greatest impediment to the country’s credit standing over the past 2-3 years. The agency admitted that the issue would play a vital role in its decision in the future whether or not to lower Thailand’s rating.”

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