Government Plans to Issue 13.5 Trillion KRW in Treasury Bonds in October

Temporary Measure to Strengthen PD Acquisition Capacity Extended Until Q4

[Asia Economy Reporter Kwangho Lee] The Ministry of Economy and Finance announced on the 24th that it will issue government bonds worth 13.5 trillion won next month through a competitive bidding process.

The issuance amounts by maturity are 3.2 trillion won for 3-year bonds, 2.5 trillion won for 5-year bonds, 3.15 trillion won for 10-year bonds, 800 billion won for 20-year bonds, 3.15 trillion won for 30-year bonds, and 750 billion won for 50-year bonds.

Government bond primary dealers (PDs) and the general public can non-competitively subscribe to a certain amount at the highest successful bid rate in the competitive bidding.

If the general public submits a bid through a government bond primary dealer by the day before the bidding, they will be given priority allocation within 20% (2.55 trillion won) of the planned competitive bidding issuance amount, excluding the 50-year bonds.

Government bond primary dealers can additionally subscribe within 10 to 35% of the successful competitive bid amount within three business days after the bid date.

Strip bonds, which separate principal and interest, can also be subscribed to by each primary dealer up to a certain amount. This is possible up to 20 billion won within the ranges of 208 billion won for 3-year and 5-year bonds, 258 billion won for 10-year and 30-year bonds, and 160 billion won for 20-year bonds.

Additionally, government bond primary dealers can apply for inflation-linked bonds within 10% of 100 billion won on the day of and the day after the 10-year bond auction. The general public can apply through PDs within 10 billion won until the day after the 10-year bond auction.

The Ministry of Economy and Finance also plans to purchase government bonds worth 1.5 trillion won before maturity to prevent concentration of bond maturities at specific points. To enhance liquidity, exchanges of about 300 billion won between 20-year elapsed issues and 30-year benchmark issues, and about 100 billion won between inflation-linked elapsed issues and inflation-linked benchmark issues will be conducted respectively.

Meanwhile, the Ministry decided to extend the temporary measures implemented in the third quarter of this year to strengthen PD subscription capacity until the fourth quarter.