Choi Sang-mok, acting president and finance minister, second from right, speaks during a meeting of government officials at the Seoul Government Complex in Gwanghwamun, Monday. Yonhap
By Lee Kyung-min
The government is seeking to attract a greater number of global Korea Treasury Bond (KTB) investors ahead of a record 240 trillion won ($165 billion) issuance this year in a preemptive move to anchor a stable inflow of offshore fixed-income funds ahead of the World Government Bond Index (WGBI) inclusion in November, the finance ministry said Monday.
Central to the move is reassuring them of a limited yield hike from the much-anticipated debt-financed extra budget of around 20 trillion won. The supplementary budget is expected to reinvigorate the county, which is reeling from anemic domestic spending and political turmoil from President Yoon Suk Yeol’s martial law fiasco and the ensuing impeachment proceedings.
Many global investors remain cautious over a potential 80 trillion won increase in KTB issuance from a year earlier, since higher volume leads to price declines, pushing up the yields as a result.
Also concerning is the Fair Trade Commission price rigging scandal probe involving KTB dealers, including brokerages and commercial lenders. The escalating scrutiny of primary dealers can dampen the already fragile demands amid falling retail KTB popularity sparked by the corporate rehabilitation of Homeplus, a troubled supermarket chain.
According to the Ministry of Economy and Finance, a slew of global investor relations events are scheduled for this month. About 100 global investment banks are expected to join.
The largest event to date will focus on handsome returns on the KTBs ahead of the WGBI inclusion.
The ministry plans to issue a record 200 trillion worth of KTBs this year.
This, together with about 20 trillion won in Foreign Exchange Stabilization bonds, and around 20 trillion won in extra budget pushes up the volume total to 240 trillion won.
This is 80 trillion won, greater than the 158 trillion won issued last year.
“We have been and will continue to be active in communication with global institutional investors in China, Australia and Japan — an investment group whose portfolio has yet to include significant KTB holdings,” a finance ministry official said.
English (United States) ·