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Debt sale rise in Aug. led by rise in state bonds despite rising market rates

Economy 11:30 September 08, 2022

SEOUL, Sept. 8 (Yonhap) -- Bond issuance in South Korea rose in August from the previous month as the central bank reaffirmed its aggressive rate hikes to stem rising inflation, industry data showed Thursday.

Debt sales stood at 69.1 trillion won (US$50.1 billion) last month, up 3.6 trillion won from a month earlier, according to the data from the Korea Financial Investment Association (KOFIA).

Last month, sales of state bonds increased 3.7 trillion won to 16.6 trillion won, with monetary stabilization bonds growing 1.5 trillion won to 9.7 trillion won.

Asset-backed securities (ABS) increased 1.4 trillion won on-month to 2.6 trillion won.

But sales of corporate bonds declined by 1.5 trillion won to 5.4 trillion won, largely as the rising interest rates slashed demand for borrowing. Sales of financial bonds also shrank 2 trillion won to 27.1 trillion won.

"Investors are betting on the possibilities of continued monetary tightening by the U.S. Federal Reserve, in addition to the speculations that the Bank of Korea would continue its rate hikes. Expectations of a slower peak-out in interest rates pushed up the bond yields," KOFIA said.

The Bank of Korea raised the key interest rate by 0.25 percentage point to 2.5 percent last month, marking the seventh rate increase since August last year.

Debt sale rise in Aug. led by rise in state bonds despite rising market rates - 1

jwc@yna.co.kr
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