S. Korean gov¡¯t offering $12.5 billion in new debt next month

The South Korean government is offering 13.9 trillion won ($12.5 billion) in new sovereign debt issues next month through competitive bidding, with about 20 percent or 2.63 trillion won worth reserved for individual investors.

The issues will be 700 billion won in two-year bonds on Feb 15; 3 trillion won in three-year notes on Feb 9; 2.7 trillion won in 5-year notes on Feb 23; 2.9 trillion won in 10-year notes on Feb 16; 750 billion won in 20-year bonds on Feb 24; 3 trillion won in 30-year bonds on Feb 2; and 750 billion won in 50-year bonds on Feb 8.

Inflation-linked treasury bonds with 10-year maturity, worth 100 billion won, will be issued on Feb 22.

The government will give priority to retail investors in the bidding on up to 2.63 trillion worth of treasury bonds, or 20 percent of the offered amount excluding 50-year notes.

It is also granting primary dealers to make an additional purchase of 5 to 30 percent of the accepted bid amount within three days after the auction.

The primary dealers can also purchase up to 20 billion won in treasury strips, the bond that has its principal and coupon sold separately. The government will supply 208 billion won in 3-year and 5-year notes, 258 billion won in 10-year and 30-year bonds, and 160 billion won in 20-year bonds.

The government is also making conversion offer to increase liquidity in the market. The conversion will issue 300 billion won worth of 30-year bonds in exchange for those that passed 20-year maturity.

South Korea has set the debt issue ceiling for this year at a fresh high of 176.4 trillion won in line with a record-high 558 trillion won budget for 2021. Net increase will be 113.2 trillion won.

Bond yields have been hovering above 1 percent, far away from the 0.50 percent policy rate, amid concerns for oversupply. The three-year bond yielded 0.97 percent by midday Friday, the 5-year at 1.322 percent and 10-year at 1.767 percent.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]