Mirae Asset Securities announced on the 10th that the first subscription for individual investor government bonds in 2025 will begin on the 13th.
The total issuance volume of individual investor government bonds in 2025 is expected to be around 1.3 trillion KRW, a 30% increase compared to the previous year. The issuance limit for January is 80 billion KRW for the 10-year bonds and 20 billion KRW for the 20-year bonds. The coupon rates (pre-tax) are 2.665% for the 10-year bonds and 2.750% for the 20-year bonds, with additional rates (pre-tax) of 0.50% to be applied respectively.
When held to maturity, compound interest is applied to both the coupon rate and the additional rate. For the 10-year bonds, the combined rate of 3.165% means that if you purchase 100 million KRW worth and hold it to maturity, you will receive 136.56 million KRW (pre-tax 36.56%). For the 20-year bonds, the combined rate is 3.25%, so investing 100 million KRW and holding to maturity will yield 189.58 million KRW (pre-tax 89.58%).
The newly issued bonds in 2025 grant a new maximum subscription limit of 100 million KRW even if you purchased 100 million KRW in 2024, allowing existing subscribers to re-subscribe. When held to maturity, a separate taxation benefit (including local income tax of 15.4%) applies up to a purchase amount of 200 million KRW.
The biggest advantage of individual investor government bonds is their high stability. Government bonds are "bonds issued by the state," and since the government guarantees payment, they are among the most stable bond products.
However, in the case of early redemption, the additional rate, compound interest, and tax benefits do not apply, and only the coupon rate is paid as simple interest.
Points to consider when investing include that individual investor government bonds cannot be redeemed early within one year after purchase, and even after that, redemption is on a first-come, first-served basis, so it may be difficult to redeem at the desired time. Also, since individual investor government bonds cannot be used as collateral for loans or pledged, you should consider whether you plan to recover your investment amount in the middle of the term.
A representative from Mirae Asset Securities said, "During periods of base interest rate cuts, the interest rates of matched assets such as deposits and bonds are likely to continuously decline," adding, "Considering this market situation, the January issuance with an additional rate of 0.5% will be a good opportunity to purchase individual investor government bonds."
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