South Korea to Auction 19 Trillion Won in Treasury Bonds in May; 1.1 Trillion Won FX Stabilization Bonds

May fiscal securities issuance plan. [Photo=Ministry of Economy and Finance]

The Ministry of Economy and Finance said it will issue 19 trillion won in Korean Treasury bonds next month through competitive auctions with primary dealers participating, citing improved market conditions including inflows tied to the World Government Bond Index. The amount is up 1 trillion won from the previous month.

The ministry said Thursday the issuance by maturity will be: 3 trillion won in 2-year notes; 3.1 trillion won in 3-year notes; 3.2 trillion won each in 5-year and 10-year notes; 600 billion won in 20-year bonds; 5 trillion won in 30-year bonds; 800 billion won in 50-year bonds; and 100 billion won in inflation-linked Treasury bonds.

Primary dealers and the general public may subscribe to a set amount on a noncompetitive basis at the auction’s awarded yield for each maturity. The ministry said it will separately announce whether it will conduct noncompetitive subscriptions through a subscription-based method in May, depending on market conditions.

To support liquidity in the Treasury market, the ministry said it plans a 500 billion won switch operation between off-the-run 10-year, 20-year and 30-year issues and the 30-year benchmark issue.

To cover temporary funding shortfalls caused by timing mismatches between revenue and spending within the fiscal year, the ministry said it will also issue 10 trillion won of 63-day fiscal securities in May. It said fiscal securities — short-term government debt that must be repaid within the fiscal year — and temporary borrowing from the Bank of Korea are used within a National Assembly-approved ceiling of 40 trillion won.

The fiscal securities auctions will be open to 32 institutions, including Monetary Stabilization Bond auction participants, Treasury primary dealers, preliminary primary dealers and government cash management institutions, the ministry said.

As of Thursday, the outstanding balance of fiscal securities was 22.5 trillion won, and temporary borrowing from the Bank of Korea stood at 5.3 trillion won, the ministry said. On an average outstanding basis for this year, the figures were 9.9 trillion won and 1.3 trillion won, respectively.

The ministry also said it will issue 1.1 trillion won of one-year, won-denominated foreign exchange stabilization bonds in May through competitive auctions, up 300 billion won from the previous month. A total of 31 institutions, including primary dealers, preliminary primary dealers and eligible Monetary Stabilization Bond auction institutions, will participate, it said.

* This article has been translated by AI.

Yujin Kim