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Biz News Korea(Eng)
S. Korean gov`t mulling 50-year sovereign bond issue
- Collected
- 2016.08.18
- Distributed
- 2016.08.18
- Source
- Go Direct
According to sources at the finance ministry, the ministry will meet with market participants and debt experts this month to tap demand for new issue in 50-year maturity.
The state must be very confident as it would be borrowing with its creditworthiness over a half a century, a ministry official said.
Earlier this month, Standard & Poor’s raised South Korea’s sovereign debt rating by one notch to AA on a par with Great Britain and France, a notch above China and two over Japan.
Due to tremendous demand for 30-year government bonds by pensions and insurers, the 30-year issues yield not much than three-year ones, he said. Given increasing demand for longer-term fixed assets, the government will decide on the scope, issue, terms, and other terms upon demand feasibility study, he said.
As of August 12, the gap between treasury bonds with a maturity of 30 years and 3 years is a mere 0.25 percentage points in Korea, compared with 1.41 percentage points in the U.S. and 1.06 percentage points in Germany.
In ultra-loose environment, debt issue in 50 years or longer has been in vogue as means for higher yield in safe security and diversification in debt structure. Of members of the Organization for Economic Development and Cooperation, Britain, France, and seven others offer sovereign debt in maturity of 50 years or longer.
By Lee Seung-yoon
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