S. Korea's central bank to buy gov't bonds to calm markets

SEOUL, Nov. 17 (Yonhap) -- South Korea's central bank said Monday it will buy
back 1 trillion won (US$709.7 million) worth of government bonds in a bid to
stabilize markets.
"The Bank of Korea (BOK) has decided to purchase treasury bonds in a move to calm
the market and increase collaterals for the central bank's repurchase agreement
operations," the bank said in a statement. An auction will be held on Wednesday.
Last week, the country's financial watchdog said the government plans to set up a
fund of about 10 trillion won in a bid to stabilize the bond market and ease a
corporate funding squeeze.
The Financial Services Commission plans to push to create a fund into which
existing institutional bond investors, such as banks and the state pension fund,
would pool money with the aim of buying a wide range of bonds, including
corporate debt
Following the announcement, however, South Korea's bond market was severely
rattled, as the creation of the envisioned fund may increase the supply of
treasury bonds in the market, prompting bond prices to tumble.
sooyeon@yna.co.kr
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