Korea Successfully Issues $3 Billion in Dollar FX Stabilization Bonds...Only 0.09 Percentage Point Above US Treasuries

by Lee Dongwoo

Published 06 Feb.2026 10:00(KST)

Updated 06 Feb.2026 13:33(KST)

3-year yield at 3.683%, 5-year yield at 3.915%

The government has successfully issued U.S. dollar-denominated Foreign Exchange Equalization Fund Bonds (FX stabilization bonds) at an interest rate only 0.09 percentage point higher than that of U.S. Treasury bonds.

The Ministry of Economy and Finance announced on the 6th that it had issued a total of 3 billion dollars in U.S. dollar-denominated FX stabilization bonds. The issue was split into 1 billion dollars of 3-year bonds and 2 billion dollars of 5-year bonds.

The coupon rates were set at 3.683% (with a coupon rate of 3.625%) for the 3-year tranche, which is the yield on 3-year U.S. Treasuries plus a spread of 9 basis points (bp, 1 bp = 0.01 percentage point), and 3.915% (with a coupon rate of 3.875%) for the 5-year tranche, which is the yield on 5-year U.S. Treasuries plus a spread of 12 bp. In particular, the 9 bp spread on the 3-year bonds is in the single digits above U.S. Treasuries, which the ministry assessed as demonstrating the high external creditworthiness of Korea’s FX stabilization bonds. The 5-year bonds also renewed the record-low spread, following the previous low set in October last year.

The government explained that this issuance reflects a trend toward resolving the so-called “Korea Discount” (undervaluation of Korean equities) in Korean paper. A spread of around 10 bp over U.S. Treasuries is comparable to that of major advanced-economy governments and international organizations, indicating that Korean government bonds are being recognized in global markets as top-tier high-grade assets.

On the 6th, at Hana Bank's Counterfeit Response Center in Jung District, Seoul, an employee was organizing U.S. dollar bills. Photo by Yonhap News.

This issuance is also expected to help bolster foreign exchange reserves. The 3 billion dollars represents the largest single-tranche issuance since 2009, meaning that the government has preemptively secured foreign-currency funding that can play a stabilizing role in the foreign exchange market amid elevated external uncertainty. In addition, it has secured in advance the funds needed to repay yen- and euro-denominated FX stabilization bonds maturing this year.

The government stated that since the end of last year it has actively promoted Korea’s improved economic fundamentals to global investors through group calls and one-on-one video conferences, highlighting the country’s manufacturing competitiveness, artificial intelligence (AI), capital market revitalization, and potential inclusion in the World Government Bond Index (WGBI). It added that the issuance was carried out by taking advantage of a window when recent market volatility had eased.

The government also assessed that by issuing these FX stabilization bonds in the “SSA (Sovereign, Supranational, Agencies)” format, it has strengthened their status as high-grade bonds in the global bond market. The government said, “The interest rates achieved in this issuance will serve as a benchmark for improving overseas foreign-currency funding conditions for domestic corporations and financial institutions in the future.”