South Korea is gearing up for another year of record bond issuance as the government prepares to boost its budget by 8.5% in 2021, raising questions over the ability of markets to absorb the sales. Korean yields jumped higher.
The finance ministry will issue as much as 172.9 trillion won ($145.6 billion) of sovereign debt in 2021, based on its budget proposal, according to An Il-whan, the second vice minister of the finance ministry.
This would eclipse the 167 trillion won planned for 2020, which came as the impact of the coronavirus forced policy makers to compile three supplementary budgets. The expected sales next year will increase expectations for the Bank of Korea, which has refrained from massive debt purchases embarked on by peers, to step up measures to prevent bond yields from surging.
“Market consensus was that next year’s issuance would be similar