South Korea Credit Rout May Bode Well for Government Bonds
- Credit crisis, weaker exports among reasons for BOK pivot
- Three-year bond yield may fall below 4% near term: Shinyoung
The Bank of Korea headquarters in Seoul, South Korea.
Photographer: Jean Chung/BloombergThis article is for subscribers only.
The outlook for South Korea’s beaten down government bonds is improving, as a credit crunch and weakening growth argue for a slower pace of monetary tightening.
The yield on benchmark three-year bonds has risen more than 220 basis points this year, as the Bank of Korea enacted its most aggressive rate-hike campaign in generations. After touching a 13-year high in September, it has since fallen about half a percentage point to 4.04% as the local corporate debt crisis unfolded.