S. Korea to sell 7.8 tln won of state bonds in April

The South Korean government announced to sell 7.75 trillion won (US$6.77 billion) of state bonds in April. In the category of short term-term, government will sell 1.9 trillion won of 3-year Treasury notes, 1.8 trillion won of 5-year bonds and 2 trillion won worth of 10-year bonds next month.

They also planned to issue 850 billion won worth of 20-year bonds and 1.2 trillion won of 30-year bonds in the near future. Furthermore, the ministry said it sold nearly 9.75 trillion won worth of state debt in March.
The 10-year (long-term debt) government bonds slumped, with the yield rising 0.7% to 1.78 pct. On the other hand, the 3-year notes yields dipped 0.41% to 1.44 on Thursday.

Apart from this, the Bank of Korea's monetary policy committee meets next week on April 19th to set the 7-day policy interest rate, which has been left unchanged at record-low 1.5 pct after seven rounds of reduction until June last year. 

“Four new members named Monday by the Bank of Korea will constitute a majority on its board, and may be open to adding stimulus by lowering interest rates or through targeted asset purchases,“ said Goohoon Kwon and Irene Choi, an economists at Goldman Sachs in a report.

We expect the BOK to cut in April, after holding its benchmark at a record low 1.5 pct for 9-months. This is supported by the increasing speculation in the market that the BOK may cut borrowing costs that are already at a record low, pushing bonds prices further up.