No fiscal bonds to be issued in November; won-denominated foreign exchange stabilization bonds set at 1.2 trillion won

The government will cut November treasury bond issuance by 5 trillion won ($3.74 billion) from its original plan, marking a second consecutive month of reductions. In October, the government trimmed issuance by drawing on excess tax revenue; this time it will tap market-making volume.

The Ministry of Economy and Finance announced the November treasury bond issuance plan Thursday.

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

As a result, the volume of treasury bonds to be issued through competitive bidding in November will fall to 12 trillion won. An additional 500 billion won in treasury bonds will be issued through an exchange method.

Market-making volume refers to new benchmark bonds issued in lieu of purchasing less-liquid off-the-run securities. When the government refrains from buying off-the-run bonds, it can reduce the corresponding market-making volume by the same amount.

The ministry said it plans to "closely monitor market conditions amid domestic and external uncertainties and immediately implement additional market stabilization measures, including emergency buybacks, if necessary."

Market participants are also watching whether the government will further reduce December treasury bond issuance and whether excess tax revenue could be tapped again.

By maturity, competitive bidding issuance is set at 1.8 trillion won for two-year bonds, 2.2 trillion won for three-year bonds, 2.3 trillion won for five-year bonds, 2.2 trillion won for 10-year bonds, 800 billion won for 20-year bonds, 2 trillion won for 30-year bonds and 700 billion won for 50-year bonds.

The government also plans to conduct pre-maturity buybacks of off-the-run two-, three- and five-year treasury bonds totaling 2 trillion won.

Meanwhile, the government decided not to issue fiscal bonds in November. Won-denominated foreign exchange stabilization bonds will be issued at 1.2 trillion won, up 200 billion won from the previous month.


y2k@heraldcorp.com