South Korea will auction off 12.4 trillion won ($11 billion) in new government debt offering and buy back 2.5 trillion won worth before their maturity to ease oversupply, according to the Ministry of Economy and Finance.
The sovereign offering will be mixed in three, five, 10, 20 and 30 years. About 20 percent, or 2.48 trillion won, would become available for retail investors.
Primary dealers (PDs) can additionally underwrite 10 to 35 percent of their underwriting volume at the competitive auction within three working days after the tender is finished.
STRIPS-specialized PDs can take over up to total 20 billion won worth STRIP bonds – up to 208 billion won for three and five-year bonds, 258 billion won for 10 and 30-year ones and 160 billion won for 20-year ones – within three business days after a competitive auction.
STRIPS, the acronym for Separate Trading of Registered Interest and Principal of Securities, is a process that separates the principal and interest of government bonds.
As for inflation-linked treasury bonds, the PDs can underwrite up to 10 percent of 100 billion won of 10-year bonds on the auction day and the following day. Retailers can subscribe up to 10 billion won through PDs until the next day.
The ministry also said that it will conduct a 2.5 trillion worth buybacks for two times and 400 billion won worth conversion to balance the market.
The government has increased to budget four times this year to address to fallouts from pandemic crisis. Debt issues also surged, pushing the market yields higher on concerns of oversupply.
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]