The Ministry of Strategy and Finance announced on December 21 its plans for improving KTB[1] regulations and 2017 issuance. As for the 2016 issuance, the government evaluated that smaller-than-planned amount was issued due to increased tax revenues.

Evaluation of 2016 Issuance

A total of 110.1 trillion won worth of KTBs, a smaller amount than 110.1 trillion won originally planned, were issued due to increased tax revenues. This also contributed to maintaining the government debt at a healthy level of 38 percent to GDP. In addition, the successful launch of 50-year KTBs[2], issued on October 11, proved that the country's capital market is developed enough for super long-term bonds, and so is the government's debt management.

2017 Issuance Plan

A total of 103.7 trillion won worth of KTBs will be issued in 2017.

* Bond issuance by maturity: 3 to 5 years (455%), 10 years (255%), 20 to 30 years (305%).

50-year KTBs worth 1 trillion won will be issued in 2017: One of the issuance is scheduled in the first half, and the rest will be issued with market conditions taken into consideration.

Improving KTB Regulations

The government will improve its primary dealer (PD) system to help primary dealers better fulfill their role as underwriters: Evaluation will be adjusted to accurately measure the amount of underwriting, and PDs are required to meet less tight financial requirements.

The Korean government will continue to work on better communicating with the market and building trust, as well as on increasing stability and efficiency in managing the government bond market, such as by promoting repurchase agreements (RPs) and inflation-linked bonds, and setting up the STRIPS[3] system.

Source: Ministry of Strategy and Finance

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