Seoul issues foreign exchange stabilization bonds worth 1.7 billion euros

The Ministry of Finance and Economy on Thursday said it has issued euro-denominated foreign exchange stabilization bonds worth 1.7 billion euros ($1.94 billion), reflecting the country's solid standing in the global financial market.

The ministry said the euro bonds were issued the previous day with maturities of three and seven years, marking Seoul's largest-ever euro-denominated stabilization bond issuance.

The bonds are issued to secure foreign currency funds to help cope with external financial uncertainties.

The issuance consists of two tranches — 700 million euros in three-year bonds carrying a yield of 2.981 percent and another 1 billion euros in seven-year bonds with a yield of 3.285 percent.

The ministry said the issuance also marked record-low spreads for both the three-year and seven-year maturities, with spreads reaching 10 basis points and 28 basis points, respectively, reflecting global investors' confidence in the South Korean economy.

"The foreign currency assets secured through the issuance of the foreign exchange bonds will serve as a strong buffer against unexpected changes in external conditions, helping maintain a resilient economy," the finance ministry said.

The Finance Ministry added that the issuance is significant as the country confirmed strong demand for such bonds despite growing uncertainties, including resurfacing geopolitical concerns in the Middle East.

The government said it shared its vision for Korea's economy with major institutional investors ahead of the issuance, including the country's drive to become one of the world's top three AI powerhouses, as well as its efforts to advance the capital market.

Yonhap