Foreign Bonds
It has been found that US$30.7 billion worth of foreign currency-denominated bonds issued by Korea reach maturity next year. The amount is the largest in history.
Under the circumstances, experts are warning that unexpected problems could arise unless preparations are made in the form of maturity extensions or additional issue, with the interest rate being predicted to rise amid the US Fed’s tapering of its quantitative easing policy and the capital flow into emerging markets forecast to be on the decrease.
According to the Korea Center for International Finance (KCIF) and banking industry sources, the amount can be divided into US$4.3 billion for January, US$4.8 billion for April, and US$3.9 for May. Not just Korea but also many other Asian countries are expected to have conversion issues next year despite the tapering, signaling a higher interest rate.
In the meantime, the capital flow into the bond markets of emerging economies is showing a downward trend. According to fund data provider EPFR, US$20.3 billion has flowed out of bond funds based on the US dollar, yen, and euro since April this year, which is equivalent to 33% of the inflow during quantitative easing.