Last month, the domestic Government Bonds interest rate showed an increase across all segments due to factors such as the supplementary budget drafting and the U.S. Federal Open Market Committee (FOMC) interest rate freeze, as well as conflicts in the Middle East.
According to data released by the Korea Financial Investment Association on the 10th regarding 'June Over-the-Counter Bond Market Trends,' the Government Bonds yield for the 3-year bond reached 2.452% at the end of last month, up 10.5 basis points (1 basis point = 0.01 percentage points) from the end of May.
The 5-year bond yield rose 7.0 basis points to 2.591%, while the 10-year bond yield increased by 1.9 basis points to 2.805%. The yields on the ultra-long 30-year and 50-year bonds also rose by 11.8 basis points and 12.0 basis points, respectively.
The Government Bonds yield sharply rose immediately after the presidential election on the 3rd of last month due to concerns over the government's supplementary budget and expansionary fiscal policy, but it stabilized somewhat by mid-month as policy uncertainties regarding the size of the supplementary budget were alleviated.
However, from mid-month onwards, international oil price volatility due to the conflict in the Middle East and the U.S. FOMC's interest rate freeze contributed to the yield showing a slight increase, finishing the month on a higher note.
The Korea Financial Investment Association noted, "Due to domestic and international circumstances, the yield showed a slight increase in the middle of the month, and despite the anticipation of interest rate cuts tied to the government's real estate policy announcement on June 27, the Government Bonds yield ultimately rose by the end of last month."
Meanwhile, the size of bond issuance last month increased by 15.7 trillion won from the previous month, totaling 89 trillion won, due to an increase in the issuance of Government Bonds and corporate bonds. The resulting issuance balance is 2,935 trillion won.
The credit spread, defined as the interest rate difference between the 3-year Government Bonds and corporate bonds, narrowed from 57 basis points at the end of May to 51 basis points at the end of June for the 'AA-' rating, while the 'BBB-' rating remained unchanged at 632 basis points.
The amount of demand forecasted for corporate bonds was 2.42 trillion won (38 cases), decreasing by 6.8 billion won compared to 3.1 trillion won in the same month last year.
The total participation amount in the demand forecast was 12.501 trillion won, which is a decrease of 171 billion won compared to the same month last year, and the participation rate, calculated by dividing the participation amount by the forecasted amount, rose to 516.6%, an increase of 107.8 percentage points.
Last month, the demand forecast for 'A' rated corporate bonds recorded three instances of unsold bonds, resulting in an unsold rate of 3.2%.
Last month's over-the-counter bond transaction volume increased to 479.2 trillion won, up 61.1 trillion won from the previous month, with an average daily transaction volume rising to 25 trillion won, an increase of 32 billion won.
The net buying amount of bonds by individual investors totaled 2.4 trillion won, decreasing from 2.5 trillion won the previous month. In contrast, foreign investors showed a net purchase of 21.7 trillion won, an increase of 5.2 trillion won.
The balance of bonds held by foreign investors amounted to 304.4 trillion won at the end of last month, up 39 billion won from the previous month.
At the end of June, the yield on certificates of deposit (CD) declined slightly by 3 basis points from the previous month to 2.56%.
In June, one new QIB bond was registered, amounting to 1.354 trillion won. As of the end of June, a total of 449 items worth approximately 187.4 trillion won had been registered as QIB bonds.