Richer, South Korean Officials Determined For Locals Gov. Bonds To Join Global Index

Asian Government Bonds are richer, led by South Korean bonds.

• China government bonds are dealing 1-3bps richer across benchmarks.
• “The cost to borrow in the local credit market has dropped around the lowest ever. The yield premium for 3-year AAA-rated corporate yuan bonds over government debt has narrowed to 27.6 basis points, around the record low of 26.9 basis points in 2022.” (Per BBG)
• Meanwhile, the South Korean sovereign bond curve has richened further, as local authorities underscored their determination “to ensure that its extension of trading hours for the onshore won will be permanent as it pushes for its biggest market reforms in decades in a bid to join a global government bond index.” (see link)
• The richening in South Korean sovereign bonds came despite May trade prices printing higher in y/y terms. Export prices were up 7.5% (prior 6.5%), while import prices were 4.6%.
• April M2 money supply figures showed an increase of 0.4% m/m versus a revised +1.7% prior.