The South Korean government bonds gained Friday as concern about the financial health of Germany’s biggest lender sapped demand for higher-yielding assets. Also, investors poured into safe-haven assets after South Korea's industrial production posted the biggest decline in nineteen months in August.
The 10-year bonds yield, which moves inversely to its price, fell 6 basis points to 1.394 percent and short-term 3-year bonds yield dipped nearly 5 basis points to 1.248 percent.
Moreover, the Korean bonds have been closely following developments in US debt market. The United States benchmark 10-year Treasury yield fell more than 1 basis point to 1.543 percent.
Deutsche Bank AG shares slid to a record in the U.S. as Bloomberg News reported that some hedge funds have reduce their exposure to the company. Fellow German lender Commerzbank AG said Thursday it would cut one in five of its employees and suspend dividend payments.
Industrial production in South Korea fell more than market expectations during the month of August, following a strike by auto workers and fewer working days due to the holiday season that reduced production.
Additionally, industrial output in South Korea was down 2.4 percent on month in August, data released by Statistics Korea showed Friday. That follows the downwardly revised 1.3 percent gain in July (originally 1.4 percent). On a yearly basis, industrial production advanced 2.3 percent after rising 1.6 percent in the previous month.
South Korea's finance ministry said the premium for holding the nation's first 50-year treasury bonds will be 4 basis points over its benchmark 10-year notes. The ministry plans to issue bonds worth 1.1 trillion won ($1.00 billion) on October 11, at the nation's longest-ever maturity of 50 years, it said in an emailed statement on Friday. The final yield for the issuance will be the spread plus the average yield for the benchmark 10-year notes for the preceding three business days, Reuters reported.
Meanwhile, The Korea Composite Stock Price Index (KOSPI) ended 1.21 percent lower at 2,043.63 points.


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