Government to Cut First-Quarter Bond Issuance to Stabilize Market

First Meeting of the Bond Issuing Institutions Council
State-Owned Enterprises Also to Cut Bond Issuance

The government has decided to reduce the volume of public bond issuance in the first quarter of this year to stabilize the bond market.

On the 25th, at the first meeting of the "Bond Issuing Institutions Council," the Ministry of Economy and Finance announced that major public bond issuers had agreed to cut their first-quarter issuance by around 6 trillion won from their initial plans set at the beginning of the year.

For Treasury bonds, the government will adhere to the first-quarter issuance target of 27 to 30 percent of the annual plan, but will adjust the March issuance to the minimum necessary level. In addition, major public bond issuers other than Treasury bonds also decided to scale back their first-quarter issuance by a total of around 6 trillion won compared with their initial plans.

The government moved to adjust issuance volumes because Treasury bond yields have recently risen due to supply pressures. Earlier, on February 13, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol said at a market conditions review meeting, "Treasury bond yields have risen somewhat due to factors such as higher interest rates in Japan and supply-demand pressures," adding, "We will strengthen monitoring of the overall bond market, including Treasury bonds."

The government and related institutions plan to closely monitor market conditions going forward and minimize market volatility. A government official said, "This year, the bond market is facing supply-demand pressures, while uncertainty in the bond market continues due to the monetary policy directions of major economies and U.S. tariff policy."

This meeting was the first to be held since the enforcement of an administrative directive introduced to strengthen the government-wide framework for managing bond issuance and responding to market stabilization.

The meeting was attended by officials from relevant ministries and agencies, including the Ministry of Economy and Finance, the Financial Services Commission, and the Financial Supervisory Service, as well as representatives from major government-guaranteed and public bond issuers such as Korea Development Bank, Export-Import Bank of Korea, Industrial Bank of Korea, Korea Electric Power Corporation, Korea Housing Finance Corporation, Korea Land and Housing Corporation (LH), and Korea Student Aid Foundation.