The Ministry of Economy and Finance plans to issue personal investment bonds worth 230 billion won in October. Following the introduction of the retirement pension type personal investment bonds last month, the subscription amount in September exceeded the issuance plan, prompting the ministry to maintain the same issuance level for October.
On September 30, the ministry announced that it would issue 230 billion won in personal investment bonds for October. The breakdown includes 20 billion won in three-year fixed-rate bonds, 30 billion won in three-year compound interest bonds, 300 billion won in five-year bonds, 1.5 trillion won in ten-year bonds, and 450 billion won in twenty-year bonds.
In September, the subscription amount reached 258.5 billion won against the planned 230 billion won, resulting in a subscription rate of 112%. The Ministry of Economy and Finance attributed the strong sales to the recently introduced retirement pension type personal investment bonds and decided to keep the issuance amount for October at 230 billion won.
The coupon rates for the October issuance will be based on the successful bidding rates of the same maturity government bonds issued in September. The rates are 3.875% for three-year bonds, 4.275% for five-year bonds, 4.510% for ten-year bonds, and 4.520% for twenty-year bonds.
Additional rates will be applied as follows: 0.05% for five-year bonds, 0.28% for ten-year bonds, and 0.43% for twenty-year bonds. No additional rate will be applied to three-year bonds, considering the yields of financial market products.
If held to maturity, the pre-tax yields are expected to be approximately 11.6% for three-year fixed-rate bonds, 12.1% for compound interest bonds, with annual average yields of 3.9% and 4.0%, respectively. For five-year bonds, the yield is expected to be around 23.6% (annual average 4.7%), for ten-year bonds about 59.7% (6.0%), and for twenty-year bonds approximately 162.8% (8.1%).
If the total subscription amount is within the monthly issuance limit, it will be fully allocated. If it exceeds the limit, allocations will be made up to the base amount of 3 million won, with the remaining amount distributed proportionally based on subscription amounts. Allocation results will be announced within two business days after the subscription period ends.
The subscription period is from October 8 to 15. Applications can be made from 9 a.m. to 4 p.m. on business days through dedicated accounts or at the sales offices and websites of retirement pension account sales agencies.
Dedicated accounts are handled by Mirae Asset Securities. The sales agencies for retirement pension accounts include Shinhan Bank, Hana Bank, NH Nonghyup Bank, Mirae Asset Securities, Samsung Securities, Korea Investment & Securities, KB Securities, and NH Investment & Securities.
Meanwhile, individual investors can apply for early redemption of personal investment bonds issued between June 2024 and September 2025 during October. In the case of early redemption, only the principal and interest based on the coupon rate at the time of purchase will be paid, and the compound interest reflecting the additional rate and the benefits of separate taxation on interest income will not apply.
* This article has been translated by AI.
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