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RETAIL INVESTMENT | Cesar Tordesillas, Korea

More overseas demand expected for S. Korean bonds

South Korean banks and companies raised US$39.1 billion by selling bonds in overseas markets in 2012.

This figure represents a 32 percent increase from a year earlier, according to the report by the Korea Center for International Finance.

The cost for the bond sales was favorable to South Korean institutions as interest rates were narrowed to 130 basis points higher than yields on the five-year U.S. Treasuries October last year, it added.

Brisk sales of overseas bonds by South Korea last year came as a spate of sovereign rating upgrades by global credit appraisers and near-zero interest rates for advanced economies raised investors' appetite for such debt, it said.

The report said investors' demand for Korean bonds is likely to remain sound this year amid globally ample liquidity. The costs for selling debts are expected to be on the gradual decline although the scope of the fall will be limited.

Concerns over U.S. fiscal cliff and the eurozone debt crisis have softened.

According to the report, the amount of maturing debt due in 2013 would reach an estimated $20.4 billion, down from $26.9 billion projected for last year. The smaller amount of maturing debt could ease burdens for the need to refinance debts, reducing possibilities for oversupply in the market, it noted.

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