Retail investors scoop up corporate bonds, seek higher yields

SEOUL, March 23 (Yonhap) -- South Korean retail investors' corporate-bond purchases more than doubled in the first two months of this year as their appetite for risky but high-yield investments increased amid record-low market rates, the bourse operator said Monday.

Individual investors scooped up a net 704.4 billion won (US$506.4 million) worth
of corporate bonds in over-the-counter deals in January and February, up 101
percent from the same period a year earlier, the Korea Exchange said (KRX) in a
statement.
As of the end of January, the benchmark three-year financial debenture with an AA
rating carried an interest rate of 6.66 percent, while the benchmark three-year
corporate bond with an A rating paid 8.17 percent, according to the KRX.
Retail investors' purchases of corporate bonds accounted for 5.1 percent of the
total as of the end of February, up from the average 4 percent last year, as
investors flocked to the corporate debt market in the face of falling interest
rates.
The Bank of Korea lowered the key interest rate by a total of 3.25 percentage
points in six consecutive cuts to a record low of 2 percent by February to
kick-start the sagging economy.
The central bank, however, held the rate steady in March to spare room for a
further economic slowdown.