Domestic Government Bonds yields fell across all maturities last month on the back of lower U.S. Treasury yields and the Bank of Korea's rate hold. Despite the decline in yields, issuance of financial debentures and corporate bonds slowed.
The Korea Financial Investment Association stated accordingly on Feb. 11 through its "Over-the-counter bond market trends for February 2026." At the end of February, the 3-year Treasury yield was 3.041%, down 9.7 basis points (1 bp = 0.01 percentage point) from a month earlier.
The 5-year yield fell 15.8 basis points to 3.278%, and the 10-year yield fell 16.1 basis points over the same period to 3.446%. Ultra-long 30-year and 50-year bonds also fell 9.4 basis points.
The Korea Financial Investment Association explained that as U.S. Treasury yields fell on concerns about a slowdown in jobs and weak consumption indicators, and as the Bank of Korea kept its policy rate unchanged, domestic Government Bonds yields also declined overall.
Even with lower yields, issuance of financial debentures, corporate bonds, and monetary stabilization bonds decreased. Although the expense of raising funds fell, issuers were cautious about new bonds. However, as Government Bonds issuance rose sharply, total bond issuance last month was tallied at 81.2 trillion won, up 7.3 trillion won from the previous month.
Demand for corporate bonds also appeared weak. There were 77 corporate bond book-building cases last month, totaling 5.0427 trillion won. That was down 5.0173 trillion won from the same period a year earlier (10.06 trillion won). Total participation in book-building amounted to 27.3411 trillion won, down 36.1159 trillion won from a year earlier.
When yields fall, over-the-counter bond transactions usually become active, but trading volume decreased last month due to the Lunar New Year holidays. In the over-the-counter bond market, last month's bond trading volume was 427 trillion won, down 31.7 trillion won from the previous month. Government Bonds fell 24.3 trillion won, monetary stabilization bonds 1.7 trillion won, and corporate bonds 7.4 trillion won.
By investor, net purchases by individuals and foreigners increased. Individuals were net buyers of 624.4 billion won in corporate bonds, 574.8 billion won in special bonds, and 483.8 billion won in Government Bonds, totaling 2.4557 trillion won. Foreign investors were net buyers of 10.9 trillion won in Government Bonds, 600 billion won in monetary stabilization securities, and 500 billion won in other bonds, totaling 12.1 trillion won.