South Korean treasury bonds lost ground on Friday as a strong stock market and bond sale plans prompted debt investors to take profit on recent gains. A softer tone on rate policy from the Bank of Korea had a limited impact on the market as many investors had already priced in expectations of a delayed rate increase.
The Finance Ministry is set to issue 10-year notes worth up to 1.5 trillion won ($1.34 billion) on Monday, while the central bank will sell 5.8 trillion won in monetary stabilisation bonds throughout the day.
"The chances of a rate increase as early as February are now quite slim as the central bank governor has exercised restraint in fighting strong government opposition to an early exit," said Jung Sung-min, a fixed-income analyst at Eugene Futures. The benchmark five-year treasury bond yield rose 2 basis points to 4.80 percent, while the March treasury bond futures contract ended 3 ticks lower at 109.55.