South Korea Plans Euro Bond Issuance to Boost Foreign Reserves

South Korea's Ministry of Economy and Finance finalized the maturity structure for euro-denominated foreign exchange stabilization bonds and plans to issue them as early as the 8th, according to investment banking industry sources. The ministry aims to preemptively boost foreign exchange reserves, which serve as an external safety buffer, as the USD-KRW exchange rate has remained above 1,500 won for over a month. The issuance timing may be delayed by one to two days depending on international financial market conditions, with the ministry having selected five lead managers and considering 3-year and 7-year maturities within the remaining annual limit of $2 billion.

Ministry Selects Five Lead Managers for Euro Bond Issuance

The Ministry of Economy and Finance selected five lead managers to handle the foreign exchange stabilization bond issuance: US-based JP Morgan and Citi, European institutions HSBC and Credit Agricole, and domestic institution KDB Industrial Bank. The ministry is actively considering 3-year and 7-year maturities for the euro-denominated bonds.

Remaining Issuance Limit Set at $2 Billion Within $5 Billion Annual Cap

The issuance scale will be determined within the remaining limit of $2 billion (approximately €1.75 billion). The National Assembly approved a total foreign currency bond issuance limit of $5 billion for this year. The ministry issued $3 billion in US dollar-denominated foreign exchange stabilization bonds in February, split between 3-year and 5-year maturities. The ministry is considering issuing the full remaining $2 billion if market demand is sufficient.

Government Targets Foreign Reserve Buildup Amid Won Weakness

The government plans to preemptively expand foreign exchange reserves through the bond issuance as the USD-KRW exchange rate has maintained levels above 1,500 won for over a month. Foreign exchange reserves serve as an external safety buffer for the economy.

FAQ

What is South Korea's Ministry of Economy and Finance planning to issue?

South Korea's Ministry of Economy and Finance finalized the maturity structure for euro-denominated foreign exchange stabilization bonds and plans to issue them as early as the 8th, with timing subject to international financial market conditions.

Why is South Korea issuing euro-denominated bonds?

The government aims to preemptively boost foreign exchange reserves, which serve as an external safety buffer, as the USD-KRW exchange rate has remained above 1,500 won for over a month.

How much is South Korea planning to issue in euro bonds?

The issuance scale will be determined within the remaining annual limit of $2 billion (approximately €1.75 billion), with the ministry considering issuing the full amount if market demand is sufficient.