SEOUL, December 04 (AJP) - South Korea has raised the ceiling for next year’s foreign-currency denominated sovereign bond issuance to $5 billion from $3.4 billion offerings this year, giving authorities more firepower to stabilize the won as demand for U.S. dollars can intensify to finance the government’s pledged $20 billion in annual U.S. investments.
The stretch marks the largest foreign-currency borrowing capacity since crisis periods—$6 billion cap in 2009 at the height of the global financial crisis and $4 billion in actual issuance in 1998 during the Asian liquidity crunch.
The revision was included in the 2026 budget framework approved by the National Assembly on Tuesday, the Ministry of Finance and Economy (MOFE) said Thursday.
The government issued $3.4 billion this year across dollar, euro, and yen tranches—just under the $3.5 billion cap that was raised in May from an originally planned $1.4 billion. In October, Seoul sold $1.7 billion in bonds at a record-low spread of under 2 percent across maturities from two to ten years.
Korean sovereign foreign-currency debt continues to hold solid investment-grade ratings: AA from S&P, Aa2 from Moody’s, and AA- from Fitch.
Under the FX stabilization bond program, the issuance ceiling may be adjusted depending on global financing conditions, repayment schedules, and movements in the foreign-exchange market.
The increase comes as the won has weakened roughly 7 percent this year, hovering near crisis-era levels of 1,500 won per dollar, pressured by a stronger U.S. dollar, heavy Korean investment in dollar-denominated assets, and concerns surrounding the government’s $350 billion investment pledge in the United States.
The dollar, which has been easing lately as institutional players complied with pleas from authorities to help defend the won, is trading at 1,466.20 won in Seoul as of 9.15 a.m. Thursday.
Domestically, the government trimmed next year’s won-denominated bond issuance target to 225.7 trillion won from the initial proposal of 232 trillion won.
In a separate statement, the finance ministry stressed that Korea’s external liquidity remains sound despite the won’s slide.
The liquidity coverage ratio—a measure of financial institutions’ high-quality assets available to meet short-term foreign-currency obligations—stood at 160.4 percent at the end of September, well above the 80-percent supervisory guideline.
Net foreign assets exceeded $1 trillion, while the foreign-debt-to-FX-reserves ratio stayed at a manageable 40.7 percent. Korea held the world’s ninth-largest foreign-exchange reserve, totaling $430.7 billion as of November.
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