Seoul: Foreign investors maintained their status as net buyers of South Korean bonds in 2025, with net purchases nearly doubling from the previous year. Offshore investors acquired a net total of 147.1 trillion won (USD$100.1 billion) in local bonds last year, marking a substantial increase of 96.4 percent or 72.2 trillion won from 2024.

According to Yonhap News Agency, the outstanding balance of foreign investors' bond holdings reached 338.3 trillion won by the end of December. The growth in foreign investment was influenced by volatile bond yields and won-dollar exchange rates, alongside expectations for South Korea's potential inclusion in the World Government Bond Index (WGBI), as noted by the Korea Financial Investors Association (KOFIA).

KOFIA highlighted that South Korea's treasury yields experienced a decline in the first half of the year after the Bank of Korea reduced the base rate by 25 basis points each in February and May, bringing it down to 2.5 percent. However, the yields rebounded in the latter half, driven by a trade agreement with the United States and an improved growth forecast for Asia's fourth-largest economy. It is important to note that bond prices typically move inversely to yields.

Conversely, net purchases of bonds by local retail investors decreased by 24 percent year-on-year, totaling 31.7 trillion won, amid a heightened risk appetite in a bullish stock market. Additionally, bond issuance experienced an 11.5 percent increase from the previous year, amounting to 969.7 trillion won in 2025. Government bond issuance saw a significant rise of 37 percent year-on-year to 304.6 trillion won, while corporate bond issuance grew by 7 percent to 129.4 trillion won.