South Korea to cut government bond issuance by 5 trillion won

South Korean Deputy Prime Minister and Minister of Economy and Finance, Lee Hyung-il, announced that the government will reduce the issuance of government bonds by 5 trillion won in October to stabilize rising market interest rates. During his first market monitoring meeting, Lee stated that if interest rate volatility persists, the government will consider further reductions in issuance and may implement emergency bond buybacks.

The decision comes as domestic 3-year government bond yields have surpassed 4%, driven in part by rising U.S. Treasury yields and global economic uncertainties. Officials expressed concern that prolonged high interest rates and widening credit spreads could increase the refinancing burden for low-credit companies.

In an effort to manage systemic risk, the government plans to integrate the monitoring of financial, foreign exchange, and real estate markets. Regarding the housing market, officials noted that while the rise in Seoul apartment prices has slowed for five consecutive weeks, they will continue to monitor trends and ensure the execution of supply measures, noting that indicators for housing permits and construction have improved by over 40% compared to last year.