Government Bond Issuance Cut by 5 Trillion Won, "Using Market-Making Volumes"

Deputy Prime Minister and Minister of Finance and Economy Lee Hyungil delivers opening remarks at an expanded macroeconomic and financial meeting he chaired at the Korea Federation of Banks in Jung-gu, Seoul, on the 29th. Ministry of Finance and Economy

The government will reduce its planned issuance of government bonds in November by 5 trillion won. After cutting issuance earlier this month using excess tax revenue, it will now use market-making volumes to make a further reduction.

The Ministry of Finance and Economy said on the 29th that it would use market-making volumes to cut November's government bond issuance by 5 trillion won from the original plan.

As a result, the amount of government bonds to be issued through competitive auctions in November will fall to 12 trillion won. The government also plans to issue 500 billion won worth of government bonds through exchanges.

Market-making volumes are the amounts of new benchmark bonds issued in exchange for purchases of less liquid off-the-run bonds. If the government does not buy off-the-run bonds, it can reduce the corresponding market-making issuance by the same amount.

The Ministry of Finance and Economy said, "We will closely monitor domestic and international uncertainties and other market conditions, and, if necessary, immediately implement additional market-stabilizing measures, such as emergency buybacks."

Market participants are also watching to see whether the government will further reduce government bond issuance in December and whether it will use excess tax revenue.

The amounts of government bonds to be issued through competitive auctions by maturity are 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 buybacks totaling around 2 trillion won before maturity for off-the-run two-, three- and five-year government bonds.

Meanwhile, the government does not plan to issue Treasury bills in November. It will issue 1.2 trillion won worth of won-denominated Foreign Exchange Stabilization Fund bonds, up 200 billion won from the previous month.

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