4th International Conference on Korea’s Sovereign Bond Market
Government to Improve Regulations to Develop KTB Market
The government unveiled its plans to promote the development of Korea’s sovereign bond market at the 4th International Conference on Korea’s Sovereign Bond Market held on November 8.
The following is a summary of the government’s plan to promote the development of Korea Treasury Bond (KTB) market.
Encourage primary dealers
The government will revise its regulations on primary dealers to encourage them to more actively participate in KTB auctions, as well as to ease their burden in the market.
Ensure steady supply of inflation-linked KTBs
The government will keep the issuance of inflation-linked KTBs steady below 15 percent of the 10 year KTB issuance, so that the market can predict the amount of the bond supply.
Promote repurchase agreement (RP) transactions
To facilitate short-term financing in the market, the government will promote RP transactions between financial institutions.
Reflect market interest rates in exchange offer yields
Exchange offer yields will reflect KTB yields in the market, with which the bonds are traded on the day.
Expand KTB-backed RPs
KTB maturity requirements for the bonds to guarantee RPs will be eased from those with at least 5 years of remaining maturity to those maturing later than the time of the repurchase.
Increase the share of long-term KTBs
The government will increase the share of long-term debt to meet growing demand in the market, as well as to properly finance the country’s mid- to long-term fiscal needs.
Please refer to the attached pdf