[Asia Economy Reporter Kwangho Lee] As bond yields fell, the bond issuance volume last month increased by 2 trillion won compared to the previous month. This is interpreted as a result of growing expectations for a slowdown in global tightening and the implementation of market stabilization measures by financial authorities.
According to the 'November OTC Bond Market Trends' announced by the Korea Financial Investment Association on the 9th, the bond issuance volume last month was recorded at 56.7 trillion won. This is an increase of 2 trillion won compared to October. Bond issuance increased mainly in special bonds (2.6 trillion won) and asset-backed securities (ABS) (1.1 trillion won).
The corporate bond issuance volume recorded 2.8 trillion won, down 900 billion won from the previous month due to the tightening of the money market. AAA-rated issuance increased by 500 billion won compared to the previous month, but AA-rated issuance decreased by 1.2 trillion won, showing differences depending on credit ratings.
Last month, corporate bond demand forecasts amounted to 410 billion won, down 97 billion won compared to the same month last year (507 billion won). However, the total amount participating in demand forecasts was 1.401 trillion won, an increase of 580 billion won compared to the same period last year (821 billion won).
Accordingly, the participation rate, calculated by dividing the amount participating in demand forecasts by the demand forecast volume, was 341.7%, an increase of 179.8 percentage points during this period. There were no unsold bonds in the demand forecasts.
The secondary market also showed a gradually improving trend. Last month, OTC bond trading volume was 329.3 trillion won, an increase of 19.2 trillion won compared to the previous month. However, the average daily trading volume was 15 trillion won, down 1.4 trillion won from the previous month.
Individual investors preferred stable high-interest bonds and net purchased 2.4 trillion won worth of corporate bonds, other financial bonds (including 여전채), special bonds, government bonds, and bank bonds.
Foreign investors net purchased a total of 4.2 trillion won, including 1 trillion won in government bonds, 500 billion won in Monetary Stabilization Bonds, and 1.2 trillion won in bank bonds. As of the end of last month, the balance of foreign holdings of domestic bonds increased by 800 billion won from October to 232.1879 trillion won.
The Korea Financial Investment Association explained, "At the beginning of last month, the announcement of liquidity support by financial holding companies, the decline in the exchange rate, and positive news on the US October Consumer Price Index (CPI) caused domestic bond yields to fall sharply," adding, "Since mid-month, various government financial market stabilization measures and the Financial Monetary Policy Committee's baby step (0.25 percentage point base rate hike) led to further declines."
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