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Economy

Moody's keeps Thailand's rating at Baa1 after coup

BANGKOK -- Moody's Investors Service will keep Thailand's long-term issuer rating at Baa1 with a stable outlook.

     The rating agency said in a report released Monday that the military coup on May 22 and the prolonged political uncertainty "will not undermine Thailand's credit strength to a material degree over the next 12 to 18 months."

     Moody's held a committee meeting on May 29 to discuss Thailand's rating, where it confirmed that the rating would stay as is. In Monday's report, the agency gave three key reasons for the decision.

     First, the Thai government is able to manage its debt despite the political turbulence. "Thailand's favorable debt structure mitigates foreign exchange and refinancing risks, given its reliance on local-currency denominated instruments and the comparatively long average time to maturity of the debt stock, at 7.9 years," it said in a statement.

     Second, the credit agency says that the three strong institutional anchors, namely the Bank of Thailand and two entities of the finance ministry -- the Fiscal Policy Office and the Public Debt Management Office -- have been unaffected by the coup.

     Third is sustained external strength. Moody's expects the current account, which was in deficit for two consecutive years up to 2013, to shift to surplus of around 1% of gross domestic product this year, citing that the ratio of non-resident investors in the local currency government bond market is still low compared to other countries in the region.

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