Auction Preview

The South Korean MOF will today auction KRW 700bn of 50-year bonds, issue KTB KTB 01625-7009. Results are due after 0330GMT/1130KST.

• The MOF last sold 50-year debt on February 5 selling KRW 750bn, the sale drew an average yield of 1.970%, and was barely covered, with a ratio of 1.06. This compares to 1.70 at the December sale, though the size was significantly smaller at KRW 350bn.
• Bank of Korea held rates at 0.50% yesterday, and offered an upbeat outlook on the economy but said its stance would remain supportive. BoK Governor Lee also touched on the bond market, he noted timing of the bank's bond buying is dependent on market conditions, and that there was no change in the previously announced plan for bond buying. The BoK will adjust liquidity via MSB's and other tools, and will proceed with preparation for 3-Year MSB issuance.
• The outlook for the auction is mixed. South Korean President Moon spoke late yesterday and said the government could take more fiscal steps to support the economy, this could weigh on demand at auction today as markets contemplate the prospect of yet another special budget. 3-Year futures took the biggest hit post announcement yesterday, so the maturity of the paper on offer could help demand.