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Thailand emerges as unlikely bond-flow magnet

Thailand's central bank logo is seen at the Bank of Thailand in Bangkok. 26, 2016. (Reuters file photo)

Thailand's sovereign bonds don’t yield much more than US Treasuries, they cost less to insure than Spanish notes and its currency is more stable than China’s managed yuan.

In a sign of how the flood of money into emerging markets is upending conventional wisdom, military-run Thailand with a credit rating just three levels above junk at Moody’s Investors Service has become a favoured low-yielding destination for bond investors.

A current-account surplus that’s forecast to be around 10% of gross domestic product this year and Asia’s best-performing currency of 2017 are luring foreign money. Overseas investors have pumped a net $2.6 billion into Thai notes so far this month, more than for South Korea, India and Indonesia combined. While Indian and Indonesian debt have attracted more foreign money this year, the two countries offer 10-year yields almost triple that of Thailand.

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