Bank of Korea Suspends Issuance of 182-Day Monetary Stabilization Bonds

[Asia Economy Reporter Jang Sehee] The Bank of Korea has decided to discontinue the regular issuance of the 182-day Treasury Stabilization Bonds with the new issuance of 3-year Treasury Stabilization Bonds.

On the 23rd, the Bank of Korea announced that it has improved the detailed operational methods related to the regular issuance items and scale of Treasury Stabilization Bonds, integrated issuance, and early redemption under the regular bidding system, considering changes in the conditions of open market operations.

First, with the new issuance of 3-year Treasury Stabilization Bonds, the regular issuance of the 182-day bonds will be discontinued, and competitive bidding for coupon bonds (maturity over 1 year) will be conducted only once a month per item.

As the regular issuance items change, the issuance scale per item has been adjusted, and the integrated issuance period and dates have been newly set to secure liquidity. The issuance scale of the 91-day bonds will be somewhat expanded (once a week, around 1 trillion KRW) considering the discontinuation of the 182-day regular issuance, while the issuance scale of the 1-year and 2-year bonds has been significantly reduced in consideration of the new issuance of 3-year bonds (once a month, around 1.3 trillion KRW).

The integrated issuance period remains unchanged at 2 months for the 1-year bonds, but the 2-year bonds' period has been extended from 2 months to 3 months, and the newly issued 3-year bonds are set at 6 months.

The integrated issuance dates remain the same for the 1-year bonds (the 9th of odd-numbered months), but for the 2-year bonds, they have been adjusted to the 2nd of January, April, July, and October, and for the 3-year bonds, changed to the 3rd of March and September.

Early redemption will maintain the current scale (around 4 trillion KRW every odd-numbered month) for the time being, but additional early redemption items will be added to enhance liquidity for the 1-year bonds. The plan is to add 1-year bonds with a remaining maturity of 6 months to the early redemption targets. In the first half of 2023, when the early redemption period for the 3-month integrated issuance 2-year bonds (with remaining maturity of 9 months or less) arrives, comprehensive improvements to the early redemption cycle, target items, and scale will be pursued.

Meanwhile, this reform will be implemented from September 1, considering the integrated issuance schedule of the 3-year bonds. The extension of the integrated issuance period for the 2-year bonds will be applied from October 1.