Last year, foreign investors' net purchases of bonds reached 147.1 trillion won, double the previous year. This was due to increased incentives for arbitrage transaction amid greater volatility in interest rates and exchange rates, and expectations for inclusion in the World Government Bond Index (WGBI).
The Korea Financial Investment Association stated accordingly on Jan. 15 through "2025 over-the-counter bond market trends." Foreign investors bought 121.1 trillion won in Government Bonds, up 73 trillion won from a year earlier, and 19.3 trillion won in Monetary Stabilization Bonds, up 2.8 trillion won. In total, they bought 72.2 trillion won more than the previous year.
By contrast, individuals made net purchases of 31.7 trillion won, down 10 trillion won from a year earlier, as expectations for a base rate cut waned and risk asset preference rose with the stock market's gains.
Last year, Government Bonds yields fell in the first half on the Bank of Korea's base rate cut and concerns over global tariff policy, but finished higher in the second half as expectations for further cuts receded following tariff deal settlements and upward revisions to economic indicators.
Total bond issuance was tallied at 969.7 trillion won. Government Bonds increased by 82.3 trillion won (37%), lifting overall issuance, Monetary Stabilization Bonds rose 1.3 trillion won (1.5%) to 89 trillion won, and corporate bonds rose 8.5 trillion won (7%) to 129.4 trillion won. Only financial bonds decreased, down 1.9 trillion won (0.6%) to 319.2 trillion won.
Book-building indicated demand of 4.38 trillion won, down 400 billion won from a year earlier, but the amount of participation in book-building rose 22.5 trillion won to 249.5 trillion won, with the participation rate up 55.4 percentage points to 569.1%.
In the secondary market, trading volume increased mainly in Government Bonds, financial bonds, and corporate bonds, reaching 5,270.7 trillion won, up 310.8 trillion won (6.3%) from a year earlier, while average daily transactions rose 1.4 trillion won to 21.7 trillion won.