ID :
52283
Wed, 03/25/2009 - 19:56
Auther :
Shortlink :
https://www.oananews.org//node/52283
The shortlink copeid
S. Korea poised to ease bond oversupply
SEOUL, March 25 (Yonhap) -- The South Korean government said Wednesday that it
will delay issuing a portion of bonds intended for an earlier buyback of
Treasurys in a bid to ease an expected oversupply in the domestic bond market.
The Ministry of Strategy and Finance said that it will delay issuing a total of
9.6 trillion won (US$7 billion) worth of Treasurys, intended to pay maturing
government debts earlier than scheduled for this year. It had planned to issue
13.6 trillion won worth of bonds for the buyback.
The move comes as the government has to raise 16.9 trillion won to finance an
extra budget announced on Tuesday, prompting concerns that it could lead to an
oversupply in the bond market and a hike in overall borrowing costs.
The government already plans to issue 74.3 trillion worth of Treasurys this year.
The extra budget plan brings the total volume of its 2009 bond issuance to 91.2
trillion won.
"With the delay, we could reduce the volume to 81.6 trillion won. For the extra
budget, the government needs to issue an additional 7.3 trillion worth of bonds
and we believe that there is enough market liquidity to absorb the amount," the
ministry said.
On Tuesday, the government endorsed a 28.9-trillion won supplementary budget
mostly aimed at creating jobs, boosting domestic demand and reviving the fast
slipping economy.
The amount, equivalent to 3 percent of the nation's gross domestic product, is
the largest ever since 1998 when the nation drew up a 13.9 trillion won
supplementary budget in the wake of the Asia-wide financial meltdown. This is
also in addition to a 284.5-trillion won annual budget for 2009.
The ministry said that it will expand 3-year and 5-year Treasurys and is
considering issuing short-term bonds maturing in less than a year. The size and
detailed timetable for short-dated bonds were not determined, it added.
To facilitate demand for government debts, the ministry said that it will exempt
foreigners from interest income taxes on their investments in the domestic bond
market.
It also plans to introduce a so-called bond-swap program where investors can
exchange their older bonds with newly issued ones, a move aimed at bolstering
market transactions.
kokobj@yna.co.kr
(END)
will delay issuing a portion of bonds intended for an earlier buyback of
Treasurys in a bid to ease an expected oversupply in the domestic bond market.
The Ministry of Strategy and Finance said that it will delay issuing a total of
9.6 trillion won (US$7 billion) worth of Treasurys, intended to pay maturing
government debts earlier than scheduled for this year. It had planned to issue
13.6 trillion won worth of bonds for the buyback.
The move comes as the government has to raise 16.9 trillion won to finance an
extra budget announced on Tuesday, prompting concerns that it could lead to an
oversupply in the bond market and a hike in overall borrowing costs.
The government already plans to issue 74.3 trillion worth of Treasurys this year.
The extra budget plan brings the total volume of its 2009 bond issuance to 91.2
trillion won.
"With the delay, we could reduce the volume to 81.6 trillion won. For the extra
budget, the government needs to issue an additional 7.3 trillion worth of bonds
and we believe that there is enough market liquidity to absorb the amount," the
ministry said.
On Tuesday, the government endorsed a 28.9-trillion won supplementary budget
mostly aimed at creating jobs, boosting domestic demand and reviving the fast
slipping economy.
The amount, equivalent to 3 percent of the nation's gross domestic product, is
the largest ever since 1998 when the nation drew up a 13.9 trillion won
supplementary budget in the wake of the Asia-wide financial meltdown. This is
also in addition to a 284.5-trillion won annual budget for 2009.
The ministry said that it will expand 3-year and 5-year Treasurys and is
considering issuing short-term bonds maturing in less than a year. The size and
detailed timetable for short-dated bonds were not determined, it added.
To facilitate demand for government debts, the ministry said that it will exempt
foreigners from interest income taxes on their investments in the domestic bond
market.
It also plans to introduce a so-called bond-swap program where investors can
exchange their older bonds with newly issued ones, a move aimed at bolstering
market transactions.
kokobj@yna.co.kr
(END)
