Subscription for Individual Investor Government Bonds Worth 150 Billion Won Opens on the 10th of Next Month

The Ministry of Economy and Finance will issue a total of 15 billion won worth of government bonds for individual investors in August. The breakdown is as follows: 3-year coupon bonds of 3 billion won, 3-year compound interest bonds of 7 billion won, 5-year bonds of 70 billion won, 10-year bonds of 50 billion won, and 20-year bonds of 20 billion won.

On July 29, the Ministry of Economy and Finance announced its August issuance plan for individual investor government bonds.

The coupon rates for these government bonds will be set based on the winning bid rates of the government bonds with the same maturities issued in July: 3.765% for 3-year, 4.165% for 5-year, 4.255% for 10-year, and 4.530% for 20-year bonds.

The additional interest rates will be 0.05% for the 5-year bonds, 0.5% for the 10-year bonds, and 0.4% for the 20-year bonds, respectively. No additional rate will be added to the 3-year bonds, considering the yields of other financial market products.

If held to maturity, the pre-tax yields are as follows: approximately 11.3% for 3-year coupon bonds (annual average yield of 3.8%), approximately 11.7% for 3-year compound interest bonds (annual average yield of 3.9%), approximately 22.9% for 5-year bonds (annual average yield of 4.6%), approximately 59.1% for 10-year bonds (annual average yield of 5.9%), and approximately 161.8% for 20-year bonds (annual average yield of 8.1%).

The subscription period is from August 10 to August 14. Applications can be made either by visiting the Mirae Asset Securities branches, the bond sales agent, or online.

Individual investors can make an early redemption of individual investor government bonds issued between June 2024 and July 2025 next month. However, only the principal and interest based on the coupon rate at the time of purchase will be returned, and benefits such as the compound interest with additional premium and the separated taxation on interest income will not be provided.

If held until maturity, individual investor government bonds offer the benefits of applying both the coupon rate and the additional interest rate on an annual compound basis. Interest income on cumulative purchases of up to 200 million won is taxed separately at 14%, so investors do not need to worry about comprehensive financial income taxation. To encourage holding to maturity, both the principal and interest are paid in a lump sum at maturity. Trading in the market is not allowed, and early redemption is possible only after one year of subscription.

This content was produced with the assistance of AI translation services.