South Korea’s bond issuance fell in November amid rising interest rates compared to the previous month.
According to the data from the Korea Financial Investment Association, last month, the value of bonds sold in the country stood at 65.8 trillion won ($56.1 billion), down 200 billion won from a month earlier.
In the reporting month –
• In the reporting month, sales of financial bonds declined by 2.5 trillion won.
• Corporate bond sales shrank by 1.8 trillion won.
• Around the same month, state debt sales also expanded by 1.4 trillion won to 14.7 trillion won.
• The issuance of social, environment and governance (ESG) bonds in November rose by 330 billion won to 5.9 trillion won.
• In November, foreign investors bought a net 6.2 trillion won worth of South Korean bonds.
• The foreign investors’ holdings of local bonds hitting an all-time high of 208.6 trillion won, up 3.5 trillion won from the prior month.
• The value of outstanding bonds in the country reached 2,469 trillion won as of end-November, up 19.05 trillion won from October.
ESG bonds are a type of sustainability debt offering that is aimed at financing corporate activities in sustainable and environmentally friendly projects.
The Bank of Korea mentioned such an amount of purchase of bonds picked up on chips and other related tech shares.
According to the central bank’s data, the amount marked a turnaround from the previous month’s net selling of local stocks by foreign investors, valued at $2.65 billion. While amid expectations that overall market conditions will improve, the net purchase rose due to increased investment in chipmakers and related tech firms.
This is the 11th consecutive month of foreigner investors’ net purchase since January and if combined, foreigners’ net purchase of stocks and bonds in November in the local financial markets came to a total $5.14 billion.
According to reports, in the meantime, in November the premium on credit default swap (CDS) for the country’s five-year dollar-denominated currency stabilization bonds stood at 19 basis points, down from the previous month’s 20 basis points.
The CDS premium refers to the cost of hedging credit risks on corporate or sovereign debt.