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Bond Issuance Rose By 12 Trillion Last Month... Bond Yields Rise

NSP NEWS AGENCY, By Soon-ki Lee and Soo-in Kang, 2024-05-11 11:15 ENX7
#bond #yields #rise

(Seoul=NSP NEWS AGENCY) = Domestic bond interest rates are on the rise.

According to the Korea Financial Investment Association on the 10th, last month’s government bond interest rates rose 20.7bp, 23.3bp, and 24.3bp to 3.529% for 3-year bonds, 3.586% for 5-year bonds, and 3.656% for 10-year bonds, respectively.

“Domestic bond rates ended higher as the Bank of Korea’s Monetary Policy Committee's decision to keep interest rates unchanged(currently at 3.50%) was in line with expectations, while the better-than-expected US employment and inflation data and Korea’s Q1 GDP growth were bearish,” said the KFTC(Korea Financial Investment Association).


The size of bond issuance was KRW 83.4 trillion, an increase of KRW 12.1 trillion from the previous month due to an increase in government bonds, MSBs, and financial bonds. The issuance balance recorded KRW 2780.3 trillion, with net issuance of government bonds and financial bonds increasing by KRW 20.6 trillion.

Corporate bond issuance amounted to KRW 8.8 trillion, down KRW 300 billion from the previous month. Grades AAA and AA increased, but grades A and BBB decreased. Credit spreads have narrowed.

The amount of corporate bond demand forecasts totaled 59 cases, amounting to KRW 3.125 trillion, a decrease of KRW 170 billion compared to the same month last year. The total participation amount in demand forecasting was KRW 21.564 trillion, an increase of KRW 3.7385 trillion compared to the same month last year(KRW 17.8255 trillion), and the participation rate was 690%, an increase of 149 percentage points compared to the same month of the previous year. There was one case of non-sale at A grade and one case at BBB grade or lower, resulting in a non-sale rate of 1.5%.

OTC bond trading volume decreased by KRW 32.2 trillion month-on-month to KRW 42.1 trillion due to rising interest rates. The average daily trading volume was KRW 20 trillion, down KRW 2.6 trillion from the previous month.

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