Plan to Issue KRW 176.4 Trillion in Government Bonds Next Year... First Issuance of 2-Year Bonds

[Asia Economy Reporter Lim Chun-han] The government has set next year's government bond issuance plan at 176.4 trillion won, an increase of 1.1% compared to this year. To evenly distribute the monthly issuance volume, a non-competitive bidding system for subscription will be introduced from next year, and 2-year government bonds will be issued for the first time.

The Ministry of Economy and Finance announced the 2021 government bond issuance plan containing these details on the 11th. The issuance limit for next year's government bonds is 176.4 trillion won, which is 1.9 trillion won (1.1%) higher than this year's total issuance scale of 174.5 trillion won based on the 4th supplementary budget. The net increase issuance scale is 113.2 trillion won, and deficit bonds amount to 93.5 trillion won. The refinancing issuance scale for maturity repayment and market formation is 63.2 trillion won.

The government plans to manage so that more volume is issued in the first half of the year than in the second half, considering early fiscal execution and maturity repayment schedules. To increase market predictability, monthly issuance volumes will be distributed as evenly as possible. Additionally, from next year, a non-competitive bidding system for subscription will be introduced, managing the non-competitive subscription volume from both option-type and subscription-type non-competitive bidding at about 20% of the total issuance volume.

The issuance ratio by maturity will be allocated approximately as follows: short-term (2- and 3-year bonds) 30±5%, medium-term (5- and 10-year bonds) 40±5%, and long-term (20 years or more) 30±5%. Considering the new issuance of 2-year bonds and market demand, the proportion of 5- to 20-year bonds will be flexibly adjusted, while adjustments to bonds of 30 years or more will be minimized. Since 2-year bonds will be issued for the first time next year, they will be issued at about 8-9% of the total, with adjustments made according to market conditions.

50-year bonds will be issued at around 4 to 5 trillion won, similar to this year. Inflation-linked bonds will be issued at about 100 billion won per month through a combination of competitive bidding and exchanges.

This content was produced with the assistance of AI translation services.