More long-dated bonds may be issued by governmentKorea’s Finance Ministry is planning to float more long-dated government next year, in a bid to finance an increase in state spending, a senior government official said on Thursday.
Vice Finance Minister Koo Yun-cheol said the issuance of long-term state bonds is expected to be raised by about 10 trillion won ($8.6 billion) next year.
Koo made the remarks at a meeting with senior economic officials to discuss plans on next year’s government bond sales.
“As the supply of long-term bonds is expected to be increased by 10 trillion won, the flattening of the yield curve is forecast to be significantly eased,” Koo said at the meeting, according to a statement released by the Finance Ministry.
Next Monday, the government will make a final decision on the amount of government bonds it will sell next year, Koo said.
Korea currently sells six types of state bonds with maturities ranging from three-years to 50 years.
Finance Ministry officials have dismissed worries that a hike in next year’s government bond sales may have an impact on bond yields but said the ministry will flexibly allocate bond issuance to minimize any fallout from the planned massive debt sale.
Earlier this month, the National Assembly approved next year’s state budget of 512.3 trillion won, up 9.1 percent from this year’s.
The ministry said it will allocate about 62 percent of the 2020 budget in the first half of next year to prop up the slowing economy. The fiscal deficit is estimated at 3.5 percent of the country’s GDP next year.