Demand for Thai corp bonds down as spreads tighten

* Corp bond issues aimed at retail, unattractive to funds

* Investors turning back to govt bonds

* For a calendar of upcoming issues, click on [ID:nBKK358580]

By Arada Kultawanich

BANGKOK, Nov 4 (Reuters) - Investors in Thailand are losing their appetite for corporate bonds because of the steadily narrowing spreads over government debt, but companies are still likely to issue a record amount this year.

Fund managers said new corporate issues were being aimed at retail investors, who were interested in absolute returns, rather than institutional investors mostly buying bonds for trading in the secondary market.

"The outlook for corporate debt is still the same -- top-tier debt and short-term corporate debt spreads will narrow in coming weeks," said Arsa Indaravijava, head of fixed income at Ayudhya Fund Asset Management.

"But lately, short-dated government bonds, such as treasury bills, are drawing more buying interest as yields there keep moving up," he added.

One-month treasury bills auctioned on Monday yielded 1.13 percent, up 8 basis points from a month before, while yields on three-month bills rose 6.3 basis points and six-month bill yields climbed 10 basis points.