South Korean treasury bond yields declined to a near 11-month low on renewed talk about the possible inclusion of the country's bonds in a global index and as concerns over Greece boosted risk appetite. Treasury yields have been on the decrease since the start of this year on expectations of interest rates staying at the current record low level for some time, in view of the government pledge to stick with growth-supportive policy.
"Yields have come down to a great degree and now look somewhat expensive," said Shin Dong-jun, a fixed income analyst at Dongbu Securities. "But there's plenty of money circulating in the market. Yields will likely go down further." The benchmark 5-year treasury bond yield slid 6 basis points to 4.26 percent, marking its lowest level since late April, 2009.
Vice Finance Minister Hur Kyung-wook said in New York late last week that he expected the country's government bonds to be included in Citigroup's World Government Bond Index during the first half of the year, according to local media reports, though the finance ministry denied them on Monday.
The June contract on 3-year treasury bonds jumped 12 ticks to 111.00. In the primary market, the finance ministry sold 0.8 trillion won worth of 20-year treasury bonds at a yield of 4.87 percent, lower than Friday's close of 4.89 percent.