Individual Government Bonds Attract 400 Billion Won in Subscription, but 20-Year Bonds Show Weak Demand

The first subscription results for government bonds for individual investors attracted 426.1 billion KRW, but the 20-year bonds were undersubscribed, failing to gain popularity.

According to Mirae Asset Securities' Mobile Trading System (MTS), the sole sales agency on the 18th, individual government bond subscriptions received from the 13th until 3:30 PM the previous day showed that the 10-year bonds attracted 349.3 billion KRW, recording a competition rate of 3.49 to 1. The 20-year bonds attracted 76.8 billion KRW, with a competition rate of only 0.76 to 1, falling short of the target volume.

Since the subscription amount for the 20-year bonds was below the planned issuance amount, the undersubscribed amount of 23.1 billion KRW will be converted and issued as 10-year bonds.

If the subscription amount is within the issuance limit, the entire subscription amount will be allocated; if it exceeds the limit, all subscribers will be uniformly allocated a base amount (3 million KRW), and the remaining volume will be allocated proportionally according to each individual's subscription size. The base amount may be adjusted in units of 100,000 KRW depending on the subscription situation. The allocation results will be notified on the day following the end date, the 18th. Unallocated subscription deposits will be refunded.

Government bonds for individual investors are bonds aimed at supporting asset formation for individuals' retirement preparation by providing a new form of stable ultra-long-term investment. They offer benefits such as additional interest rates, annual compound interest, and separate taxation when held to maturity. The June issuance fixed the coupon plus additional interest rates at 3.69% for 10-year bonds and 3.725% for 20-year bonds. Subscriptions are possible up to 100 million KRW per year, and benefits apply only upon maturity redemption. They are purchased through subscription like public offerings, and a dedicated account must be opened on Mirae Asset Securities' website or app. The minimum purchase amount is 100,000 KRW, and it can be increased in units of 100,000 KRW. Subscriptions are planned monthly until November this year, with subscription periods running from 5 to 3 business days before the issuance date (the 20th of each month).

However, government bonds for individual investors are long-term investment products that pay interest and principal in a lump sum at maturity, so there is no interest payment during the holding period. Also, in case of early redemption, the coupon rate is applied as simple interest, and additional interest, annual compound interest, and separate taxation benefits do not apply. Early redemption is possible from one year after purchase, but since redemptions are processed on a first-come, first-served basis within the monthly early redemption limit, redemption may not always be possible. These bonds cannot be used as collateral loans or pledged, and ownership transfer is restricted, so investors who may want to recover their investment mid-term should be cautious.

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