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Gov"t Issues One Percent Bonds

Dec 31,1998
The government issued a one percent denominated interest rate bond.
According to the Budget Office(BO) on December 31, the Deposit Insurance Corporation (DIC) issued bonds equivalent to 1.521 trillion won bearing just one percent in denominated interest rates. The BO explained the bonds will initially only be offered to the big banks, and are part of the measures undertaken to boost big banks by allowing them to raise their BIS capital adequacy ratio by issuing additional stocks.
A source at the BO said that as the banks have the effect to advance their BIS capital adequacy ratio only by retaining the bonds issued by the government, the level of the bond's interest rates does not matter. Therefore, the government will increase its issuance of bonds with a very low denominated interest rate.
The government's plan was to issue a total of 64 trillion won in bonds over three years, from 1997 to 1999, to support the restructuring of financial sectors. It has already issued a total of 40.6 trillion won in bonds at the close of 1998.


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