SEOUL, Sept. 14 (AJP) — South Korea's 10-year government bond offering drew bids worth nearly 2.5 times the amount on offer despite yields hovering near multi-year highs.
Bids totaled 6.928 trillion won for 2.8 trillion won ($2.1 billion) of 10-year government bonds offered, equivalent to 247.4 percent of the planned sale, according to the Ministry of Economy and Finance.
The offering was sold at a weighted average yield of 4.510 percent, slightly below the benchmark 10-year government bond yield of 4.540 percent at the close on Friday and above the 4.415 percent recorded at the previous 10-year auction in August, reflecting the sharp rise in domestic bond yields over the past month.
Bid coverage, however, improved from the previous sale.
The August auction received 7.156 trillion won of bids for 3 trillion won offered, equivalent to 238.5 percent of the planned issuance.
The coverage ratio was 8.9 percentage points higher than in August, although the absolute amount of bids declined as the offering size was reduced.
Bids ranged from 4.485 percent to 4.545 percent, while both the lowest and highest accepted yields were set at 4.510 percent.
The partial allocation ratio at the cutoff yield was 45.9 percent.
The auction followed a sharp selloff in the domestic bond market last week, with the benchmark 10-year government bond yield ending Friday at 4.540 percent after rising 8.7 basis points in a single session.
The rise in yields has come amid higher global bond rates and renewed inflation concerns driven by elevated crude oil prices.
The latest sale nevertheless showed resilient demand for Korean government bonds, with the government placing the full amount offered despite sharply higher borrowing costs than at the previous auction.
The 10-year bonds carry a 4.25 percent coupon and mature in June 2036.
AJP Takeaways
- South Korea's 10-year government bond auction received 6.928 trillion won of bids for 2.8 trillion won offered, producing bid coverage of 247.4 percent.
- Bid coverage improved from 238.5 percent in August even as the weighted average auction yield rose 9.5 basis points to 4.510 percent.
- The government awarded the full 2.8 trillion won despite elevated bond yields, although absolute bids declined from August as the offering size was reduced.
Copyright ⓒ Aju Press All rights reserved.
