Government to Issue 600 Billion Won Worth of 50-yr KTBs in December
The Ministry of Economy and Finance plans to issue 50-year KTBs worth approximately 600 billion won on December 7, 2018, which will be this year’s fourth issuance of 50-year KTBs.
* 50-yr KTB issuance in 2018 (billion KRW): 325 (March), 540 (June), 660 (September)
The Ministry conducted market research before deciding on the fourth issuance to assess the impact of delay in IFRS17 implementation and the demand of end-users’ including insurance companies.
* IFRS17 is a new accounting standard issued by the International Accounting Standards Board (IASB). Under IFRS17, the liabilities of insurers will be calculated based on market value, instead of book value, when a contract comes into effect, creating larger asset-liability duration mismatches.
The Ministry has also discussed closely with a council consisting of fixed income specialists in asset management companies and insurance companies.
Successful issuance of 50-year KTB will
- provide financial stability as it will lower the burden of issuing deficit-bonds
- supply matching assets to such liabilities as insurance and pension
The auction date is scheduled to be on Friday, December 7, and the winning rate is determined in a Dutch auction.
Please refer to the attached PDF