Foreigners' Bond Holdings Reach 174 Tril. Won
The Korea Financial Investment Association announced on May 10 that foreign investors’ investment in the domestic OTC bond market hit an all-time high last month. “As of the end of the previous month, their domestic bond holdings added up to 173.9931 trillion won, up 3.1 trillion won from March,” it said.
Last month, they net bought 6.5 trillion won of domestic bonds, consisting of 1.7 trillion won of government bonds, 3.8 trillion won of monetary stabilization bonds and one trillion won of bank bonds. According to the association, this has to do with a rise in interest rate and short-term arbitrage. The net purchase volume somewhat decreased from the previous month.
The domestic bond yield showed curve stiffening in spite of stable U.S. Treasury yields and monetary easing reconfirmation. This is because the Q1 economic growth rate fell short of expectations, which resulted in a more long-term yield increase with various other factors.
Last month, the bond issuance increased 9.3 trillion won to 80 trillion won, led by more corporate, special and monetary stabilization bonds. The outstanding volume increased 28.2 trillion won to 2,366.4 trillion won.
The corporate bond issuance increased no less than 7.5 trillion won to 15.8 trillion won. The credit spread edged down with institutional investors’ demand continuing. The ESG bond issuance increased 3.4 trillion won to 11.326 trillion won and the CD issuance increased 1.4 trillion won to 3.81 trillion won.