BOK to roll back short-dated bond offering in line with tightening cycle

[Source: Bank of Korea]

South Korea’s central bank on tightening cycle will reduce issuance of monetary stabilization bonds (MSBs).

The Bank of Korea (BOK) said on Thursday that it will roll back MSB issuance to 6.6 trillion won ($5.63 billion) in November, 2.4 trillion won smaller than the amount it plans to issue this month.

By maturity, offering of 91-day MSBs would cut from 1 trillion won to between 700 billion won and 800 billion won, one-year debts from 1.2 trillion won to 700 billion won, two-year from 2.5 trillion won to 1.8 trillion won and three-year from 1.3 trillion won to 1 trillion won.

The central bank’s MSB redemption will increase from 4 trillion won to 5 trillion won.

MSBs are a structural adjustment tool to control liquidity in the market. The lesser MSB issuance, the more liquidity in the market. The notes are issued by the BOK to financial institutions and individual investors.

“The cut in MSB issuance and increase in buyback would help improve investors’ sentiment and ease interest volatility,” said the bank.

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