5-year tranche at 60 billion won, 10-year at 70 billion won, 20-year at 20 billion won
Subscriptions open July 8–14; early redemption requests accepted during same period
The Ministry of Economy and Finance will issue 160 billion won ($104 million) in retail government bonds in July, with the 20-year bond offering a cumulative pre-tax return of 162.8 percent if held to maturity.
The ministry announced its July retail government bond issuance plan Monday, setting total supply at 160 billion won across five tranches: 3 billion won in 3-year coupon bonds, 7 billion won in 3-year compound-interest bonds, 60 billion won in 5-year bonds, 70 billion won in 10-year bonds, and 20 billion won in 20-year bonds.
Face interest rates are based on the winning bid rates from the June issuance of government bonds with matching maturities: 4.000 percent per annum for the 3-year, 4.045 percent for the 5-year, 4.115 percent for the 10-year, and 4.300 percent for the 20-year. A spread is added on top — 0.05 percentage point for the 5-year, 0.60 percentage point for the 10-year, and 0.65 percentage point for the 20-year. No spread applies to the 3-year bonds, in consideration of prevailing financial market product returns.
Expected pre-tax returns at maturity are approximately 12.0 percent for the 3-year coupon bond, 12.5 percent for the 3-year compound-interest bond, 22.2 percent for the 5-year, 58.5 percent for the 10-year, and 162.8 percent for the 20-year. On an annualized basis, those figures translate to roughly 4.0 percent, 4.2 percent, 4.4 percent, 5.9 percent, and 8.1 percent, respectively.
Subscriptions will be accepted over five business days from July 8 to July 14 through Mirae Asset Securities branches, its website, or its mobile app. The minimum subscription amount is 100,000 won, with increases allowed in increments of 100,000 won. The annual purchase limit per individual is 200 million won.
If total subscriptions for a given tranche fall within the issuance limit, the full amount will be allocated. If subscriptions exceed the limit, up to 3 million won will be allocated on a priority basis, with the remaining supply distributed in proportion to each subscriber's application amount. Allocation results will be announced on the first business day after the subscription period closes.
Early redemption requests for retail government bonds issued between June 2024 and June 2025 will also be accepted during the same July 8–14 window. Investors who redeem early will receive only the principal and interest calculated at the face rate; they will forfeit compound interest including the spread as well as the benefit of separate taxation on interest income.
fact0514@heraldcorp.com
