MoEF to Issue 14.5 Trillion KRW in Treasury Bonds in February... 3-Year Bond Yield Exceeds 2%

[Asia Economy Sejong=Reporter Kwon Haeyoung] The Ministry of Economy and Finance announced on the 27th that it will issue government bonds worth 14.5 trillion won through a competitive bidding process on February.

This amount is about 1 trillion won less than the government bond issuance scale in January (15.431 trillion won). The issuance volume by maturity is ▲ 2-year bonds 1 trillion won ▲ 3-year bonds 2.6 trillion won ▲ 5-year bonds 2.8 trillion won ▲ 10-year bonds 2.8 trillion won ▲ 20-year bonds 800 billion won ▲ 30-year bonds 3.9 trillion won ▲ 50-year bonds 500 billion won. Inflation-linked government bonds will also be issued at a scale of 100 billion won.

The Ministry of Economy and Finance will conduct an exchange of about 300 billion won between the 10-year and 20-year matured bonds and the 30-year benchmark bonds next month to improve liquidity of government bonds.

Looking at the government bond issuance interest rates in January, the 2-year bond recorded 1.885%, the 3-year bond 2.07%, the 5-year bond 2.38%, and the 10-year bond 2.555%, showing an upward trend. When bond issuance increases in the market, government bond prices fall and government bond yields rise. This leads to a rise in market interest rates, which may increase the interest burden on households and companies.

On the 24th, the Ministry of Economy and Finance submitted a supplementary budget proposal worth 14 trillion won to the National Assembly, stating that it will issue government bonds worth 11.3 trillion won to raise funds, dividing the volume as evenly as possible by month to reduce the burden on the government bond market.