Seoul asks institutions to refrain from bond and fund withdrawals to stabilize debt market

[Photo by Yonhap]

Seoul authorities have urged public and private institutional majors to refrain from pulling out of bonds and funds excessively until the debt market recovers from the tantrums over a default in a public debt related to Legoland Korea project through multiple state-led stabilization measures.

According to multiple sources from the financial industry on Friday, policymakers from the Financial Services Commission (FSC) together with Financial Supervisory Service and Ministry of Economy and Finance on Thursday held videoconference with institutional majors including National Pension Service, Korea Post, Teachers¡¯ Pension, Government Employees Pension Service, Korea Land and Housing Corporation, NH Bank, and Samsung Life Insurance.

They were asked to take market conditions into account when selling or pulling out of bonds and funds as their movements can shake the market while authorities are desperately trying to restoring it through 3 trillion won ($2 billion) stabilization fund and liquidity aid to brokerages to buy corporate bonds and commercial papers.

According to FSS, up to 1 trillion won had pulled out the money market funds daily from Oct. 18 to 24.

The financial authority has launched over 50 trillion won in relief aid to ease capital market strain.

Institutions have been responding to capital calls of bond market stabilization fund and minimizing new bond issues.

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