Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance said that the government succeeded in issuing foreign exchange equilibrium bonds (foreign pyeong bonds) denominated in dollar and euro at a record-low minimum interest rate, confirming trust in the Korean economy, "This is of great significance in the current crisis situation." I emphasized on the 14th.



Deputy Prime Minister Hong said about the indirect effects of the issuance of external bonds at a meeting of foreign economy ministers held at the government's Seoul government building on the same day, "evaluating fundamentals such as strong trust of foreign investors in the Korean economy, such as Korea's COVID-19 quarantine and economic crisis response, and external soundness. I double-checked,” he said.



He said, "The foreign exchange reserves of euro-denominated bonds have been expanded at a minimum cost, such as no interest at negative (-) interest rates, and it is expected that the foreign currency procurement costs of domestic companies and financial institutions will also be reduced due to the drop in the additional interest rate for external bonds that serve as a benchmark. "He emphasized.



He added, "And since 2014, for the first time since 2014, foreign currency bonds were issued in euros, forming a benchmark, contributing to diversification of private foreign currency procurement channels focused on the dollar."



Deputy Prime Minister Hong said, "Due to the Corona 19 global pandemic, volatility in the external financial and foreign exchange markets is relatively stable compared to the crisis, while difficulties such as internally and externally responding to quarantine and contracting domestic demand, externally, such as a decline in exports and contraction of orders continue." He said the successful issuance of external bonds was an example.



On the morning of the 9th (local time) in New York, the Ministry of Science and Technology issued a 10-year dollar denominated external bond of $625 million and a 5-year Euro denominated bond of 700 million euros.



The issuance rate is 1.198% for 10-year dollar bonds plus 50bps (1bp=0.01% points) to 10-year US Treasury bond rates, and -0.059% for 5-year euro bonds plus 35bps for 5-year euro midswap.



All of these are all-time lows, and Euro bonds are the first non-European Euro denominated government bonds with negative interest rates.



(Photo = Yonhap News)