Moody's Investors Service on Friday raised the outlook on Thailand's Baa3 rating for its long-term, foreign-currency debt obligations to positive from stable. Also changed to positive is the outlook for Thailand's Baa3 foreign currency debt and Ba1 foreign currency bank deposit ceilings. Moody's left unchanged at stable the outlook for the government's Baa1 domestic currency bond rating.

Moody's said its outlook change was prompted by Thailand's "resiliency in its external payments position, thanks to the recent rebound in exports and resumption of net capital inflows".

In particular, Moody's noted that these developments, coupled with the central bank’s “supportive policies,” have boosted foreign exchange reserves to a level that significantly reduces vulnerability to external shocks. The rating agency also noted that external debt has been reduced to more prudent levels. Moreover, Moody's believes that the authorities will maintain a policy framework and investment environment that will sustain confidence and protect Thailand's much-improved external performance.

Moody's said, however, that concerns remain over the government's fiscal position and long-term debt trajectory. Government revenues relative to existing debt levels and to GDP remain relatively weak. This situation threatens the ability of the government to achieve its medium-term target of eliminating the budget deficit, as well as its ability to service public sector debt.

Moody's said that the future course of Thailand’s ratings will be influenced by the ability of the authorities to maintain prudent and flexible fiscal, monetary, and exchange rate policies.

Moody’s classifies Thailand’s long-term foreign currency bonds and notes as investment grade. Thailand has higher credit ratings than Indonesia and the Philippines but falls below those of Hong Kong, Singapore, Korea, Malaysia and Taiwan. This broadly corresponds with assessments by Fitch Rating and S&P, which raised its Thailand’s outlook to positive one-two months ago.

Moody’s ratings for Asia