Potential homebuyers browse residential projects at a recent House and Condo Expo. Although property sales improved in recent months, the financial condition of some developers has continued to weaken, noted the central bank. Wisuttipong Rodpai
The Bank of Thailand has expressed concern over rising credit risks among some large corporations with high debt-to-equity (D/E) ratios, particularly in the property and trading sectors.
According to the central bank’s Financial Stability Report 2025 released on Wednesday, a number of highly-leveraged large corporations (HLLCs) display increasing financial fragility due to their rising D/E ratios.
The sectors facing the greatest risk include property development and trading businesses.
The financial vulnerability of some property developers was driven by sluggish sales growth amid weak purchasing power and the slower pace of Thailand’s economic expansion.
Meanwhile, several trading businesses have come under pressure from declining revenues resulting from weaker exports and subdued domestic consumption, collectively weakening the financial position of firms in these sectors.
The central bank noted creditors of HLLCs include both banks and bondholders. In the third quarter of this year, total outstanding loans of these corporations tallied 6 trillion baht.
Of this amount, 3 trillion baht was financed by financial institutions, accounting for 25% of the banking sector’s corporate loan portfolio, while the remainder came from the bond market, representing 60% of total corporate loans.
“Although property sales have improved in recent months, partly supported by the relaxation of loan-to-value [LTV] measures, the financial condition of some developers has continued to weaken,” according to the report.
The regulator temporarily eased LTV rules between May 1, 2025 and June 2026 to support the property market and help reduce excess inventory. The measures allow 100% financing for second-home purchases priced less than 10 million baht, as well as for first-time buyers purchasing units priced more than 10 million baht.
In the first half of 2025, transfers of low-rise and high-rise residential units contracted by 9.8% and 13.1% year-on-year, respectively. The backlog of unsold supply remains high, particularly in the low-rise segment priced more than 5 million baht.
Given the elevated risks in the property sector, the central bank said it will continue to monitor developments.
The regulator has also implemented several measures and is preparing additional policies to safeguard financial system stability.
In collaboration with the Finance Ministry, the Thai Bankers’ Association and other relevant agencies, the central bank is developing a new credit guarantee scheme to help small and medium-sized enterprises gain more appropriate access to financing.
The regulator said it will continue to monitor risks and uncertainties that could affect financial stability. In particular, tighter financial conditions may weigh on liquidity for both the business and household sectors in the period ahead.
Given heightened uncertainties both at home and abroad, investor confidence may weaken, reducing the fundraising capacity of local businesses.
Corporations with high debt burdens, in particular, may face challenges in rolling over high-yield bonds amid the current risk-off market sentiment, noted the report.