Thaksin, Black
Songkran, and the Red Shirts
collectively
lay waste to Thailand's credit rating
By Jon Fernquest 
The
stock market hasn't suffered much after Black
Songkran,
former Prime Minister Thaksin's failed attempt to start a revolution in
Thailand.(Read on stock market and revolution and see photo of red shirts crashing the ASEAN Summit on right).
Thailand's credit ratings, however, have been downgraded this week by leading credit rating agencies around the world.
These credit rating downgrades will ultimately lead to higher borrowing costs.
These higher borrowing costs will come at a time when increased government spending and borrowing is needed for fiscal stimulus to help pull Thailand out of the current global economic slump.
Government spending now is more essential than at any time since 1997.
Gradual slippage in Thailand's credit rating has been apparent for several months due to perceptions of political risk.
During the aggressive street protests in December and the shutdown of Bangkok’s international airport for a whole week by the People's Alliance for Democracy (PAD), Thailand's political risk rose rapidly in the eyes of investors.
The risk premium and interest rates that the Thai government had to pay when it borrows money to finance a spending deficit rose quickly too (Read article).
There was also talk at that time of a credit rating downgrade if the political conflict continued in the long-term.
Standard & Poor's (S&P) revised its outlook on Thailand’s BBB+ sovereign credit rating to negative from stable.
The "outlook" on a credit rating indicates whether a downgrade in the near future is likely (negative) or unlikely (stable).
Moody’s also lowered the outlook on Thailand’s Baa1 foreign-currency debt in December to negative from stable
Black Songkran -
the name given to this year's Songkran, with all its political turmoil
Red Shirts - the political group in Thailand that wears red shirts, with large numbers coming from rural Isan and northern Thailand, Thaksin's support bases, opposed to the yellow shirts large numbers who come from urban Bangkok
crash, crash a party - go to a place or event where you haven't been invited and disrupt it
collectively - a group of people doing something together
lay waste - destroy
credit rating - a measure of credit worthiness, a measure of the risk of loaning to a borrower, a measure of how likely (See Wikipedia) การจัดอันดับความน่าเชื่อถือ
a credit agency, a credit rating agency - a company that rates the credit of corporate debt หน่วยงานจัดอันดับความน่าเชื่อถือ
a credit rating agency - a company that estimates how likely a borrower is to not pay back the money it has borrowed (default) and assigns a numerical score to measure this (credit rating) (See Wikipedia)
downgraded, downward revision - reduced, lowered to a lower status or level
leading X - the most important members of group X
ultimately Y - in the end, after all changes have finished
fiscal stimulus - when the government spends money or cuts taxes to get the economy growing and moving again
pull out of slump - when the economy gets better and recovers
gradual - moving slowly
slippage - moving downwards, little by little, in small amounts
apparent - noticeable, visible
perceptions of political risk -
Standard & Poor's - a company that publishes financial research and analysis on stocks and bonds, also provides credit rating information (See Wikipedia)
pull out of a slump - when the economy gets better, when the economy starts growing again after a downturn
apparent - visible, can be seen
perceptions of Y - the way people see something, their understanding of it
political risk - the chance that political events might negatively affect the success of a project ความเสี่ยงทางการเมือง
aggressive -
a premium - an additional amount added to a price
a risk premium - an additional amount added to a price to pay for extra risk
deficit, spending deficit - when the money you spend is more than the money you receive, deficit = receipts - spendings
finance a spending deficit - borrow money to pay for the spending deficit
Red Shirts - the political group in Thailand that wears red shirts, with large numbers coming from rural Isan and northern Thailand, Thaksin's support bases, opposed to the yellow shirts large numbers who come from urban Bangkok
crash, crash a party - go to a place or event where you haven't been invited and disrupt it
collectively - a group of people doing something together
lay waste - destroy
credit rating - a measure of credit worthiness, a measure of the risk of loaning to a borrower, a measure of how likely (See Wikipedia) การจัดอันดับความน่าเชื่อถือ
a credit agency, a credit rating agency - a company that rates the credit of corporate debt หน่วยงานจัดอันดับความน่าเชื่อถือ
a credit rating agency - a company that estimates how likely a borrower is to not pay back the money it has borrowed (default) and assigns a numerical score to measure this (credit rating) (See Wikipedia)
downgraded, downward revision - reduced, lowered to a lower status or level
leading X - the most important members of group X
ultimately Y - in the end, after all changes have finished
fiscal stimulus - when the government spends money or cuts taxes to get the economy growing and moving again
pull out of slump - when the economy gets better and recovers
gradual - moving slowly
slippage - moving downwards, little by little, in small amounts
apparent - noticeable, visible
perceptions of political risk -
Standard & Poor's - a company that publishes financial research and analysis on stocks and bonds, also provides credit rating information (See Wikipedia)
pull out of a slump - when the economy gets better, when the economy starts growing again after a downturn
apparent - visible, can be seen
perceptions of Y - the way people see something, their understanding of it
political risk - the chance that political events might negatively affect the success of a project ความเสี่ยงทางการเมือง
aggressive -
a premium - an additional amount added to a price
a risk premium - an additional amount added to a price to pay for extra risk
deficit, spending deficit - when the money you spend is more than the money you receive, deficit = receipts - spendings
finance a spending deficit - borrow money to pay for the spending deficit
Standard
& Poor's (S&P) revised its outlook
on Thailand’s BBB+ sovereign
credit rating
the outlook - what people think will happen in the future ภาพรวมในอนาคต
a stable outlook - people believe that there will be political stability in the future ความมั่นคงในอนาคต
the outlook - what people think will happen in the future ภาพรวมในอนาคต
a stable outlook - people believe that there will be political stability in the future ความมั่นคงในอนาคต
Here is an extract from today's Bloomberg article on the credit rating downgrade:
Thai Debt Ratings Cut by Fitch on Political Turmoil (Update2)
By Shanthy Nambiar and Suttinee YuvejwattanaApril 16 (Bloomberg) -- Thailand’s foreign-currency debt rating [sovereign rating] was lowered one level by Fitch Ratings, which cited a “protracted” period of political uncertainty in the nation.
The rating was cut to ‘BBB’ from ‘BBB+,’ [a rating downgrade] while the local- currency issuer default rating was cut to ‘A-’ from ‘A,’ Fitch said in a statement today. Standard & Poor’s lowered Thailand’s local-currency rating to A- from A this week, and Moody’s Investors Service said it may reduce the foreign-currency rating.
After the downgrade, Fitch also raised its outlook on the country to 'stable' from 'negative', in a hint that another downgrade may be unlikely.
turmoil - disorder
and confusion
political turmoil - political disorder and confusion
foreign-currency credit or debt rating - the estimated ability of a borrower to pay back borrowed money in foreign currencies (foreign currency denominated debt)
foreign currency-denominated debt - money that a borrower must pay back in a foreign currency (must pay back in dollars instead of baht, for example)
local currency credit or debt rating, local- currency issuer default rating - - the overall ability capacity to generate sufficient local currency resources to meet its
financial obligations (both foreign and local currency) (Source: glossary)
Fitch Ratings - an international credit rating agency dual-headquartered in New York City and London. It was one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975, together with Moody's and Standard & Poor's.
(See Wikipedia and website)
cited Y - mentioning Y (to support argument)
protracted - lasts or goes on for a long time, longer than expected or usual
a “protracted” period of political uncertainty - the public doesn't know what is going to happen in politics for a long time
a downgrade - making it lower
rating downgrade - making the rating lower
political turmoil - political disorder and confusion
foreign-currency credit or debt rating - the estimated ability of a borrower to pay back borrowed money in foreign currencies (foreign currency denominated debt)
foreign currency-denominated debt - money that a borrower must pay back in a foreign currency (must pay back in dollars instead of baht, for example)
local currency credit or debt rating, local- currency issuer default rating - - the overall ability capacity to generate sufficient local currency resources to meet its
financial obligations (both foreign and local currency) (Source: glossary)
Fitch Ratings - an international credit rating agency dual-headquartered in New York City and London. It was one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975, together with Moody's and Standard & Poor's.
(See Wikipedia and website)
cited Y - mentioning Y (to support argument)
protracted - lasts or goes on for a long time, longer than expected or usual
a “protracted” period of political uncertainty - the public doesn't know what is going to happen in politics for a long time
a downgrade - making it lower
rating downgrade - making the rating lower
“The inability of successive governments to resolve disruptive civil unrest” has led to a deterioration in Thailand’s creditworthiness, Vincent Ho, an associate director in Fitch’s sovereign group, said in the statement.
successive governments
- many governments, one after another
resolve disruptive civil unrest - put an end to protests that interfere with business and life
deterioration - falling apart, condition getting worse over time
creditworthiness - how good a borrower a borrower is, the likelihood that they will pay back a loan on time without problems
sovereign - related to a company ("sovereign debt" means the debt of a country)
resolve disruptive civil unrest - put an end to protests that interfere with business and life
deterioration - falling apart, condition getting worse over time
creditworthiness - how good a borrower a borrower is, the likelihood that they will pay back a loan on time without problems
sovereign - related to a company ("sovereign debt" means the debt of a country)
Bangkok is in its fifth day of emergency rule following the breakup of anti-government riots that killed two and injured 135 people. Prime Minister Abhisit Vejjajiva had to call off a regional summit of Asian leaders last weekend after the protesters, who support former Premier Thaksin Shinawatra, stormed the meeting venue calling for Abhisit to resign.
The benchmark SET Index fell 0.1 percent as of 12:31 p.m. in Bangkok today, its first day of trading after a three-day holiday marred by street clashes. The baht, which slipped 2 percent this year, traded at 35.38 against the dollar.
emergency rule - a
special period with special powers to meet special dangers
call off Y - cancel, stop, not have planned event
the meeting venue - the place where a meeting is held
benchmark - a standard of compariso, that other things are compared to (like other stocks in one industry, for example)
the SET Index - the measure of where the stocks on the Stock Exchange of Thailand are moving in value
marred - ruined, destroyed
call off Y - cancel, stop, not have planned event
the meeting venue - the place where a meeting is held
benchmark - a standard of compariso, that other things are compared to (like other stocks in one industry, for example)
the SET Index - the measure of where the stocks on the Stock Exchange of Thailand are moving in value
marred - ruined, destroyed
Rising Uncertainty
“Foreign investors are used to political instability in Thailand over the past three years, but when it is validated by rating cuts, it means uncertainty has risen quite significantly,” said Sebastien Barbe, Hong Kong-based head of emerging-market strategy at Calyon, the investment banking unit of France’s Credit Agricole SA. “Some investors are going to be more cautious about buying Thai assets.”The Southeast Asian nation hasn’t issued long-term foreign- currency bonds in almost a year. Thailand sold 55 billion yen ($556 million) of three-, five- and seven-year so-called Samurai bonds to Japanese investors on May 14.
Finance Minister Korn Chatikavanij said on April 14 that anti-government protests that triggered the state of emergency are driving off tourists and investors, deepening the country’s worst economic slump since the Asian financial crisis.
The government may lower its forecast for a 3 percent economic contraction this year, as the protests have made reviving Southeast Asia’s second-biggest economy more difficult, he said. Foreign investment into Thailand may slow because of the protests, Korn said today in an interview on Channel 9.
political instability -
when the political situation is changing suddenly and unpredictably
validated by - proven to be true or correct
foreign currency bonds - a bond that has to be paid back in a foreign currency
driving off Y- making group Y go away and not come back
validated by - proven to be true or correct
foreign currency bonds - a bond that has to be paid back in a foreign currency
driving off Y- making group Y go away and not come back
‘Profoundly Sad’
....Thailand has said it will spend about 1.57 trillion baht ($44.4 billion) over three years, mainly on infrastructure projects, to help create jobs and spur economic growth. That is in addition to an earlier 116.7 billion-baht stimulus package of public works, training programs, cash handouts and tax breaks...profoundly Y - very
very Y, deeply Y
public works - government construction projects such as new buildings and roads
cash handouts - money given to people for free
tax breaks - reductions in taxes
public works - government construction projects such as new buildings and roads
cash handouts - money given to people for free
tax breaks - reductions in taxes
(Source: Bloomberg)
