Bank of Korea Reduces Monetary Stabilization Bond Issuance by 1.5 Trillion Won

[Image source=Yonhap News]

Amid rising bond yields due to concerns over US monetary tightening, the Bank of Korea has decided to reduce the issuance volume of Monetary Stabilization Bonds (MSBs) by 1.5 trillion won.

According to the Bank of Korea on the 13th, the 3-year bond auction on the 15th will be reduced from 1.2 trillion won to 800 billion won, and the 91-day bond auction on the 20th will be reduced from 1.1 trillion won to 800 billion won.

The 2-year bond auction on the 22nd will be cut from 1 trillion won to 800 billion won, the 1-year bond auction on the 22nd from 300 billion won to 100 billion won, and the 91-day bond auction on the 27th from 900 billion won to 500 billion won, respectively.

If market volatility increases further, the issuance volume of MSBs in July will also be reduced.

Monetary Stabilization Bonds are securities issued by the Bank of Korea to banks, financial institutions, or the general public to regulate the money supply.

When the Bank of Korea reduces issuance, financial institutions such as banks and securities firms have more capacity to purchase other government bonds besides MSBs, which generally leads to an increase in bond prices and a decrease in yields.

The Bank of Korea explained, "We expect that this measure, totaling 1.5 trillion won, will contribute to improving investor sentiment in the bond market and easing interest rate volatility."

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