If we liken an investment portfolio to assembling a football team for a match, a strong portfolio doesn't just need "forwards" like stocks aiming for high returns; it also requires a key "midfielder" role filled by "bonds" to help control the game, create balance, and reduce volatility when facing risks.
Dr. Somjin Sornpaisarn, Managing Director of the Thai Bond Market Association (ThaiBMA). He outlined the key strategy for 2026, emphasizing that investors should move away from speculation and return to "investing with understanding" to allocate funds aligned with their true objectives.
With interest rates beginning to stabilize and bond yields trending downward, expecting sky-high returns like in the past two years might not be realistic this year. Instead, the focus should be on selecting high-quality bonds to build a protective shield against secondary market price fluctuations.
Dr. Somjin Sornpaisarn, Managing Director of the Thai Bond Market Association (ThaiBMA). He said that investing in bonds is crucial for portfolio construction because having a balanced mix of stocks and bonds improves overall returns and helps keep total portfolio risk within manageable levels.
He stressed that the key to investing in 2026 is "investing with understanding" and structuring investments based on clear objectives. Investors should avoid speculation and instead understand their own needs, including their financial goals and true risk tolerance.
Dr. Somjin. He further compared portfolio construction to a football team, where different parts of the portfolio represent "forwards" seeking long-term high returns and accepting losses, "midfielders" who support by generating returns and reducing risk, and "defenders" focusing on high liquidity and low risk.
Bonds act as the midfielders — the main tool for investment funds that are not urgently needed and cannot tolerate heavy losses like those in the stock market.
However, in 2026, expected bond investment returns may not be as high as in the past two years because the rapid decline in interest rates has now leveled off.
Additionally, Dr. Somjin emphasized that if investors understand the bond market mechanics well, price volatility won't be a problem if they choose high-quality bonds and adopt sound strategies.
Even if interest rates rise causing bond prices to drop, holding bonds to maturity with issuers capable of repaying means no actual loss occurs since there's no need to sell in the secondary market.
A survey of market participants showed that most expect the Monetary Policy Committee (MPC) to cut the policy interest rate by 0.25% once around Q2 2026, lowering it from 1.25% to 1.00%.
Regarding Thai bond yields, respondents anticipate 5- and 10-year yields in 2026 to decrease by about 5-10 basis points from the end of 2025. Key factors include government funding plans, Thailand's economic growth, policy interest rate direction, and foreign investment flows.
Dr. Somjin noted that the Thai bond market grew steadily throughout 2025, with outstanding value totaling 17.91 trillion baht, a 4.67% increase from the previous year, equivalent to 96% of GDP. This growth was mainly driven by increased government fundraising.
In contrast, the private sector slowed bond issuance, with long-term bond issuance dropping 3.51% to 881 billion baht, reflecting caution amid economic uncertainties from external factors and domestic household debt issues. However, there was an increase in public offerings (PO) of long-term bonds to the general public.
The top industries raising funds through bonds were energy, finance and securities, and real estate, respectively.
Currently, the outstanding bond market structure by issuer is as follows:
Regarding returns and investment flows, government bond yields declined, especially short-term bonds, which fell more sharply than long-term ones, aligning with the policy interest rate at 1.25%.
As a result, government bond yields at the end of 2025 were:
Foreign investors remained interested in Thai bonds, with net purchases totaling over 72.4 billion baht, raising their holdings to 918 billion baht.
Another notable trend is the growth of sustainable bonds (ESG Bonds), with new issuance rising 18.18% to 208 billion baht. There has been a shift toward more Sustainability-linked Bonds (SLBs) issued by both government and private sectors.
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