April 2020 Treasury Bond Issuance Plan
The Ministry of Economy and Finance plans to issue Korea Treasury Bonds worth of approximately 11,900 billion won in April 2020 through competitive bidding. And, to help primary dealers enhance their underwriting capability, following changes will be made to non-competitive bids option II and applied temporarily for the second quarter (From April to June) of 2020:
- More non-competitive bid options
- Longer bidding period
- Wider ranges for successful bid in Differential Pricing Auction
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As-is
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To-be
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% of the option
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20% to the top-performing PDs
15% to the 2nd best-performing PDs
10% to the 3rd best-performing PDs
5% for the rest (according to their market-making performances for the last half of the year)
+ additional 10%p to 1st to 5th best-performing PDs, and 5%p to 6th to 10th best-performing PDs (according to the monthly evaluation)
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25% to the top-performing PDs
20% to the 2nd best-performing PDs
15% to the 3rd best-performing PDs
10% for the rest (according to their market-making performances for the last half of the year)
+ additional 10%p to 1st to 5th best-performing PDs, and 5%p to 6th to 10th best-performing PDs (according to the monthly evaluation)
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Bidding period
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D (12:00~15:30)
D+1 to D+2 (9:00~15:30)
D+3 (9:00~12:00)
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D (12:00~15:30)
D+1 to D+3 (9:00~15:30)
Expand to Friday if the D+3 date falls on Thursday (9:00~15:30)
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Successful bid range in Differential Pricing Auction
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3Y and 5Y KTBs:
Bids falling within 3 basis points to the highest yield at the competitive auction
10Y, 20Y, and 30Y KTBs:
Bids falling within 4 basis points to the highest yield at the competitive auction
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All maturities:
Bids falling within 5 basis points to the highest yield at the competitive auction
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The Ministry of Economy and Finance plans to issue Korea Treasury Bonds worth of approximately 11,900 billion won in April 2020 through competitive bidding.
April 2020 Auction Schedule
(KRW billion)
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Name
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Auction Notice
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Auction Date
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Settlement Date
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Issue Date
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Type1
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Volume
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3Y KTB 01250-2212
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March 26
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March 30
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March 31
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December 10, 2019
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F
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1,400
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3Y KTB 00000-2306
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June 10, 2020
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P
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950
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5Y KTB 01500-2503
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April 1
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April 6
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April 7
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March 10, 2020
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F
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2,200
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10Y KTB 01375-2912
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April 8
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April 13
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April 14
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December 10, 2019
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F
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1,800
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10Y KTB 00000-3006
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June 10, 2020
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P
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1,200
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20Y KTB 01125-3909
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April 14
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April 20
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April 21
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September 10, 2019
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F
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700
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30Y KTB 01500-5003
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March 26
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March 31
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April 1
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March 10, 2020
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F
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2,900
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50Y KTB 02000-6809
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April 7
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April 10
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April 13
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September 10, 2018
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F
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750
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1 F = fungible issue, P = pre-issuance
1) Non-competitive bids option I
For retail investors, KTBs worth of 2,230 billion won (no more than 20% of the offered in the auction excluding 50Y KTBs) will be allocated first at the highest accepted bid rate.
2) Non-competitive bids option II
A non-competitive purchasing option II is granted to primary dealers (PD) whereby PDs can make additional purchases of 10%-35%* of the accepted bid amount within three business days after the auction (but the bidding period is expanded to Friday if the D+3 date falls on Thursday).
* Up to 25% of the option is granted to the top-performing PDs, 20% to the 2nd best-performing PDs, 15% to the 3rd best-performing PDs, and 10% for the rest, according to their market-making performances for the half of the year. MOEF will grant additional 5~10%p to best performing PDs in the monthly evaluation.
3) Non-competitive bids option III
KTB STRIPS* are regularly supplied for up to 160 billion won for each maturity (210 billion won for 10Y and 30Y KTBs) on the third business day after the auctions. PDs that have obtained the right to purchase these KTB STRIPS can make purchases of up to 20 billion won.
* The option is granted according to the outcomes of monthly evaluation conducted in the previous month, and the PDs have to meet their obligations of separating interest and principal for their purchases over the next month.
4) Inflation-linked Korea Treasury Bonds (KTBi)
KTBi underwriting rights are granted to PDs within 10%* of the scheduled amount of issuance for the month (100 billion won), which can be exercised on the 10Y KTB auction date of 10Y KTBs, and on the next date of the 10Y KTB auction date.
* If the total amount of the bidding exceeds the issue amount of the month, KTBi will be allocated by the unit of one billion won according to the allocation standards, such as bidding amounts.
Non-PDs & Non-PPDs (retail investors) can purchase KTBi worth up to 10 billion won (up to 10% of scheduled issue amount for the month) through PDs between the notice date of the 10Y KTB auction and the 1st business day after the auction.
* KTBi interest rate spread will be adjusted to the average spread of five business days before the competitive 10Y KTB bidding.
5) Conversion offer
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Date
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KTB for Issue
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KTBs for Purchase
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Amount
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April 17, 2020
10:40~11:00
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KTBi 01750-2806
(Maturing on June 10, 2028)
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KTBi 01500-2106
KTBi 01125-2306
KTBi 01750-2506
KTBi 01000-2606
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KRW 100 billion
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* Further detail will be provided on April 13, 2020 on the BOK website.
Please refer to the attached PDF
