Ministry of Economy and Finance Plans to Issue 12.8 Trillion KRW in Government Bonds in January 2021

[Asia Economy Reporter Kwangho Lee] The Ministry of Economy and Finance announced on the 24th that it plans to issue approximately 12.8 trillion won worth of government bonds through a competitive bidding process in January next year.

To encourage participation from general investors in the government bond market, the government intends to allocate about 20% (2.56 trillion won) of the planned issuance amount preferentially to those submitting bids.

When general investors participate through a non-competitive subscription method, they will be able to acquire a certain amount of government bonds at the highest successful bid rate from the competitive bidding.

The government plans to start with 3-year bonds (3.25 trillion won) in January next year, followed by 5-year bonds (2.5 trillion won), 10-year bonds (2.9 trillion won), 20-year bonds (1 trillion won), and 30-year bonds (3.15 trillion won).

Each Primary Dealer (PD) can additionally purchase government bonds within 10-35% of the competitive bidding successful bid amount within three business days after the bid date for each bond maturity.

Each strip PD can acquire strip bonds within three business days after the bid date, up to 200 billion won within the ranges of 208 billion won for 3-year and 5-year bonds, 258 billion won for 10-year and 30-year bonds, and 160 billion won for 20-year bonds.

To enhance government bond liquidity, exchanges of about 200 billion won between elapsed and benchmark issues of 20-year bonds and 30-year bonds, and about 100 billion won between elapsed and benchmark issues of inflation-linked bonds will also be conducted.

Meanwhile, considering that institutional improvements such as regular issuance of 2-year government bonds and non-competitive subscription methods will be implemented from February next year, the Ministry of Economy and Finance plans to extend the temporary measure of increasing the non-competitive subscription exercise ratio (+5 percentage points), which has been in effect since the second quarter of next year, until January next year.

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