SEJONG, Oct. 20 (Yonhap) -- South Korea's finance ministry said Tuesday it will begin issuing two-year Treasury bonds next year as it seeks to ease concerns about record bond sales.
South Korea increased its cap on selling Treasury bonds to 167.8 trillion won (US$139 billion) this year, from an initial ceiling of 130.2 trillion won, to cope with the coronavirus pandemic.
Next year is expected to mark another year of record debt sales as the government plans to increase its budget by 8.5 percent.
South Korea will begin selling two-year Treasury bonds in 2021 "to ease the burdens on mid- and long-maturity Treasury bonds and set a stable yield for short-maturity bonds," Vice Finance Minister An Il-whan said in a conference hosted by Yonhap Infomax, the financial news and information arm of Yonhap News Agency.
An stopped short of providing details of the plan, including the size of its issuance.
To encourage retail investors to invest in Treasury bonds, the government will provide financial incentives if they hold the bonds for more than 10 years, An said.
Earlier this month, the finance ministry extended incentive programs for primary dealers in state bond auctions until the end of this year, as part of its efforts to stabilize the bond market.
The ministry launched the incentive programs for primary dealers, who buy state bonds directly from the government and sell them to the market, in April this year as it sought to stabilize the bond market in the face of a hike in sales of state bonds to fight the coronavirus pandemic.
The temporary programs had been set to expire at the end of September, but the ministry extended them until the end of December.