MOF Conversion Offer Sees Yields Decline

Futures in South Korea are lower, 10-year down 23 ticks at 125.62 and breaching new session lows. The contract is still higher on the week having opened around 125.40.

• Vice Finance Minister Lee gave an upbeat assessment of the economic recovery late yesterday, predicting the recovery will be faster than expected. "If last year was about hanging in there, this year is about the economy rising back up for sure," Lee said. "We'll make sure policy will help maintain the momentum for recovery." Finance Minister Hong has said previously he expects a mid-to-upper 3% expansion in the economy this year, higher than the 3.2% rise expected earlier. Several banks, such as Goldman Sachs, predict growth will be above 4%. Lee also said South Korea will step up efforts to prop up the sluggish job market as the pace of job recovery remains weak amid the fallout of the pandemic.
• In the cash space yields are lower across the curve. The MOF conducts its conversion offer today, purchasing KRW 200bn from the market to issue 30-year bonds (issue KTB 01875-5103).
  • Issues to be purchased:
  • KTB 02625-2806
  • KTB 01375-2912
  • KTB 04000-3112
  • KTB 03750-3312
• As a reminder the BoK has said it will purchase up to KRW 7tn of bonds from the market in the first half of the year, the first KRW 2tn batch was bought on March 9. The bank bought three-year government bonds at KRW 1.17tn, five-year at KRW 140bn and 10-year bonds at KRW 690bn.