5-, 10- and 20-year maturities each cut by 10 billion won from prior month

The Ministry of Economy and Finance said Thursday it plans to issue a total of 200 billion won ($150 million) in retail government bonds in November.

By maturity, the ministry will issue 2 billion won in three-year coupon bonds and 3 billion won in three-year compound-interest bonds. It will also issue 20 billion won in five-year bonds, 140 billion won in 10-year bonds and 35 billion won in 20-year bonds. Compared with the previous month, the three-year issuance volume remains unchanged, while the five-, 10- and 20-year maturities have each been reduced by 10 billion won.

The central building of Government Complex Sejong in Eojin-dong, Sejong [Newsis]
The central building of Government Complex Sejong in Eojin-dong, Sejong [Newsis]

Coupon rates will be based on the winning bid rates from October issuances of government bonds with the same maturities: 3.940 percent for three-year bonds, 3.935 percent for five-year bonds, and 4.155 percent each for 10- and 20-year bonds.

Spread rates will be 0.10 percent for five-year bonds, 0.63 percent for 10-year bonds and 0.79 percent for 20-year bonds — up 0.05 percentage point, 0.35 percentage point and 0.36 percentage point, respectively, from the previous month. No spread rate applies to three-year bonds.

Pre-tax yields at maturity for November retail government bonds are estimated at about 11.8 percent (an annual average of 3.9 percent) for three-year coupon bonds and about 12.3 percent (an annual average of 4.1 percent) for three-year compound-interest bonds. Five-year bonds are projected at about 21.9 percent (4.4 percent annually), 10-year bonds at about 59.6 percent (6.0 percent annually) and 20-year bonds at about 162.6 percent (8.1 percent annually).

If total subscriptions do not exceed the issuance limit for each maturity, applicants will receive the full amount requested. If the limit is exceeded, each subscriber will be allocated up to 3 million won on a priority basis, with any remaining volume distributed in proportion to subscription amounts.

The subscription period runs from Nov. 11 to Nov. 17, with applications accepted on business days from 9 a.m. to 4 p.m. Retail investors may apply through dedicated accounts or retirement pension accounts, either at a sales agent's branch or online.

Meanwhile, retail government bonds issued between June 2024 and October 2025 are eligible for early redemption requests in November. However, early redemption entitles holders only to the principal and simple interest based on the coupon rate — compound interest including the spread rate and the benefit of separate taxation on interest income will not apply.


y2k@heraldcorp.com