Korea Fails to Join Global Sovereign Bond Index... Ministry of Economy and Finance Says "Enhancing Investor Convenience"

The government stated regarding the failure of Korea's early inclusion in the World Government Bond Index (WGBI), "We plan to continue efforts to closely communicate with investors and enhance the sense of institutional improvement."

[Image source=Yonhap News]

On the 28th (local time), the Financial Times Stock Exchange (FTSE) Russell in the UK announced the September FTSE bond market country classification and maintained Korea's status as a watchlist country for the government bond index. This means Korea was not included in the World Government Bond Index.

The WGBI is an index composed of government bonds from major countries. It is considered one of the world's top three bond indices, consisting of government bonds from major advanced countries such as the United States. Inclusion in the WGBI leads to the inflow of stable foreign capital tracking the index and enhances the credibility of government bonds. The WGBI managed by FTSE Russell is estimated to have tracking funds of $2.5 trillion.

The Ministry of Economy and Finance stated, "We will continue efforts to achieve the earliest possible inclusion in the WGBI," adding, "We will reflect global investors' opinions that complete inclusion in the WGBI through flawless institutional improvements and efforts to enhance investor convenience is more important than rapid index inclusion for expanding investment in Korean government bonds."

FTSE Russell is known to have positively evaluated the government's close and constructive communication regarding the progress and effects of institutional improvements Korea is pursuing to enhance government bond market accessibility. Since continuous monitoring will be conducted with global investors, the government plans to promptly and steadily implement institutional improvement measures to enhance government bond market accessibility as planned.

FTSE Russell regularly decides on inclusion in the World Government Bond Index in March and September by considering factors such as government bond issuance scale, national credit rating, and market accessibility. In September last year, FTSE Russell included Korea as a watchlist country. Once selected as a watchlist country, inclusion is reviewed for at least six months to two years.

The Ministry of Economy and Finance estimates that about 90 trillion won will flow into the domestic bond market upon inclusion in the WGBI.

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