Bank of Korea revises monetary stabilization bond issuance

The Bank of Korea said it will revise the way it issues monetary stabilization bonds from Aug. 31 to improve their reserve-adjustment role and secondary-market trading liquidity.

For one-year bonds, the issuance window will be extended to three months from two months. The Bank will shift annual issuance dates to the first day of March, June, September and December.

The Bank will split early redemptions into two monthly operations, held on the first and third Tuesdays. The first operation will retain the existing fixed schedule, buying back three issues in each round: one one-year issue and two two- or three-year issues. Eligible one-year bonds will have four, five or six months remaining to maturity. The second operation will cover about three issues per round, with eligible bonds announced in the monthly issuance plan. Existing regular-redemption issues excluded from the first operation under the revised rules will be included in the second operation for that month.

It will switch regular competitive-auction weeks for one- and two-year bonds, moving one-year issuance to the first Wednesday and two-year issuance to the second Wednesday. The Bank will designate the most recently issued coupon bond sold in a competitive auction as a benchmark for each maturity.

The changes will be reflected in the September monetary stabilization bond issuance plan scheduled for announcement on Aug. 27.