Safest Investment

 

The Wall Street Journal (WSJ) reported on June 25 that American investors are buying a lot of Korean bonds, as they view Korean bonds to be one of the safest investments in Asia.

According to Dealogic, a professional research institute, Korea has issued US$17 billion worth of dollar-denominated bonds this year, which is a significant increase from the US$6.2 billion of previous year. American investors this year bought more than half of the total dollar bonds issued, a 35 percent increase from last year. 

The WSJ pointed out that Korean bonds are rated A+ by Standard & Poor’s (S&P), but these bonds are more popular among American investors than Chinese and Japanese bonds with higher ratings, or even Hong Kong and Singaporean bonds with the highest ratings. 

A staff member at Western Asset Management said, “Korean bonds are very attractive as they have characteristics of both advanced countries and emerging markets.” He added, “Western Asset Management has bought dollar bonds and KRW government bonds issued by GS Capital.”

An official at Bank of America Merrill Lynch pointed out that there are also reflective benefit effects from tapering of Federal Reserve. The official explained, “Korea is the first country that American investors have interests in as they return to the Asian market.” He also emphasized, “Usually Korea and China have a spotlight in emerging bond markets, but Korea is more attractive since China has default risks.”

WSJ projected that the demand for Korean bonds will increase more, as big American investors increase their interest in the Korean market over time. 

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