Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand (BOT), revealed that the BOT plans to alleviate liquidity issues in the financial market to reduce the impact on the economy by purchasing government bonds worth over 100 billion baht between March 13-20, 2020, reducing and canceling bond issuances, and is ready to ensure that the government bond market operates normally by purchasing additional government bonds to prevent fluctuations in government bond yields.

“The outbreak of COVID-19 has impacted the money and capital markets. The BOT plans to discuss the effects in a meeting tomorrow (March 23) to ensure that government agencies provide assistance. We expect to see clarity within a week regarding measures to support the public. The BOT plans to hold discussions on March 24,” Mr. Veerathai stated.

However, the BOT has been continuously monitoring the situation and believes it is necessary to implement measures to support the stability of the Thai financial market through operations in three areas:
1. Bond Mutual Funds The BOT has established a special mechanism to enhance liquidity for mutual funds through commercial banks. Preliminary estimates indicate that there are bond mutual funds with quality assets that can be used as collateral to request liquidity from the BOT, totaling over one trillion baht.

2. Private Sector Bonds The Thai Bankers' Association, Government Savings Bank, insurance businesses, and the Government Pension Fund have jointly established a Liquidity Support Fund to Reduce Funding Risks in the Bond Market, with an initial amount of 70,000 – 100,000 million baht to invest in new private sector bonds from quality companies that are facing liquidity issues, preventing them from rolling over their maturing bonds.

3. Government Bonds The BOT is ready to ensure that the mechanism of the government bond market operates smoothly, efficiently, and with sufficient liquidity through continuous purchases of government bonds. These measures will enhance liquidity in the financial market and help restore the functioning of the bond market amid global financial market volatility, instilling confidence in bond investors.

The purpose of establishing the Liquidity Support Fund to reduce funding risks in the private bond market is to provide liquidity assistance to bond issuers facing temporary liquidity issues, ensuring the stability of the private bond market, particularly enabling primary market funding to operate normally and reducing systemic risks to the economy and financial system.

The fund will be an open fund for institutional investors, with an initial size of no less than 70,000-100,000 million baht to enhance liquidity for bonds maturing in 2020-2021, with the possibility of expanding the fund size later. It will raise funds from institutional investors such as commercial banks, government savings banks, insurance companies, and pension funds, with a lifespan of approximately 2-3 years.

As for the conditions for receiving assistance, bond issuers must have a credit rating of investment grade of BBB- or higher at the time of the fund's establishment and must be companies with good operational status but facing temporary liquidity issues. Companies must seek funding from internal sources or find external funding sources for no less than 50% of the amount due. Once they meet the specified conditions, bond issuers can have the bond managers or underwriters contact the fund to propose the sale of short-term bonds not exceeding 270 days.