Thailand may pivot to shorter-term debt instruments to meet government borrowing needs in the fiscal year starting Oct. 1, as rising US Treasury yields drive volatility across global bond markets. Director-General Jindarat Viriyataveekul of the Public Debt Management Office told reporters in Bangkok that the agency is considering greater use of treasury bills, term loans and promissory notes. "This is a challenge for us, as the global market is quite volatile," Jindarat said. The PDMO may initially raise new funds and refinance debt using short-term instruments, then convert the borrowing into longer-term securities when market conditions become more favorable.

Borrowing for state-enterprise projects and programs under emergency decrees may initially take the form of term loans or promissory notes to better match project timelines. Thailand plans 1.26 trillion baht ($37.5 billion) of new borrowing in fiscal year 2027, with public debt projected to climb to 69.7% of GDP. Jindarat said the debt ratio will likely peak in fiscal year 2028, but remain below the 70% ceiling set under Thailand's fiscal framework.

The impact of higher global yields on the government's existing debt portfolio should be limited because about 89% of its borrowing is long-term, Jindarat said. That leaves refinancing and interest-rate risks largely concentrated in new debt issuance. The government's average borrowing cost remains about 2.6%, little changed from the previous year.

Jindarat said she expects only a modest increase in the coming fiscal year because the volume of new borrowing isn't excessively large.