Subscription for 17 Billion Won in Government Bonds for Individual Investors Opens on February 6

The Ministry of Economy and Finance will issue a total of 17 billion won in government bonds for individual investors in February. This includes 6 billion won in five-year bonds, 8 billion won in ten-year bonds, and 3 billion won in twenty-year bonds.

Recently, the volume of five-year bonds has been reduced due to waning demand, while the volumes of ten-year and twenty-year bonds have been increased in response to higher demand resulting from expanded additional interest rates.

On January 28, the Ministry of Economy and Finance announced this plan for the issuance of government bonds for individual investors in February.

The coupon rates for these bonds will be set based on the winning bid rates of the same-maturity government bonds issued in January (3.385% for five-year, 3.520% for ten-year, and 3.565% for twenty-year bonds). Additional interest rates will be added: 0.2% for five-year, 1.0% for ten-year, and 1.1% for twenty-year bonds, respectively.

If held to maturity, the applicable interest rates will be 3.585% for five-year bonds, 4.520% for ten-year bonds, and 4.665% for twenty-year bonds. Accordingly, the pre-tax yield at maturity will be approximately 19% for the five-year bonds (annual average yield of 3.9%), about 56% for the ten-year bonds (annual average yield of 5.6%), and about 149% for the twenty-year bonds (annual average yield of 7.4%).

The allocation amount will be fully assigned if the total subscription amount is within the monthly issuance limit for each type. If the total subscription amount exceeds the monthly issuance limit for each type, a standard amount (3 million won) will be allocated to all subscribers first, and the remaining amount will be distributed in proportion to the subscription amount. The allocation results will be announced on the next business day after the subscription period ends. The subscription period will run from February 6 to February 12.

Government bonds for individual investors are products that offer the coupon rate, the additional interest rate, and the benefit of annual compound interest if held to maturity. Interest income on investments up to 200 million won is subject to a separate tax rate of 14%, so investors do not need to worry about comprehensive taxation on financial income. To encourage holding to maturity, both principal and interest are paid in a lump sum at maturity. These bonds cannot be traded in the market, and early redemption is only possible after one year from subscription.

Meanwhile, individual investors will be able to redeem early the government bonds for individual investors issued between June 2024 and January 2025 during February. However, only the principal and interest based on the coupon rate applied at the time of purchase will be returned. The compound interest including the additional interest rate and the separate taxation benefit on interest income will not be provided.

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