A three-year issue of the "Government Bonds for individual investors," which allows individuals to invest in Government Bonds with small amounts, will be launched in Apr. next year. Currently, the shortest maturity is five years, which created a burden of having to invest for a long period. The government will also allow the interest, which is currently paid in a lump sum with principal at maturity, to be withdrawn before maturity.
The Ministry of Economy and Finance on the 26th announced the "2026 Treasury Bond Issuance Plan and Government Bond Market Policy Direction," centered on these measures. Accordingly, a three-year issue with a shorter maturity than existing products will be added to the Government Bonds for individual investors, which now come in three types (five-year, 10-year, and 20-year). However, unlike existing Government Bonds for individual investors, the Ministry of Economy and Finance (MOEF) decided not to apply separate taxation to interest income from the three-year issue. An MOEF official said, "Separate taxation of interest income is an incentive to encourage long-term investment," adding, "The three-year issue has a relatively short maturity, so there is no such benefit."
For Government Bonds for individual investors, principal and interest are paid at once at maturity, but starting next year, the interest on these Government Bonds will be withdrawable midterm. The spread on the 10-year and 20-year issues, currently around 70 bp (1 bp = 0.01 percentage point), will be expanded to at least 100 bp next year. Furthermore, Government Bonds with 10-year and 20-year maturities will become investable in defined contribution (DC) plans and individual retirement pension (IRP) accounts.
To strengthen management of the Government Bond market, the Ministry of Economy and Finance (MOEF) plans to establish the Government Bond Policy Division and the Government Bond Market Division on the 2nd of next month. It also decided to operate a council of bond-issuing institutions to share issuance plans with major issuers such as Korea Development Bank and Export-Import Bank of Korea. The council will hold its first meeting on the 29th and, starting next year, will hold regular quarterly meetings.
Meanwhile, the total issuance limit for treasury bonds next year is 225.7 trillion won. That is a decrease of 500 billion won from this year's issuance (226.2 trillion won). Taking expenditure needs into account, the Ministry of Economy and Finance (MOEF) decided to issue 27%–30% in the first quarter. By maturity, it plans to issue 35% ±5% in short-term (two- and three-year), 30% ±5% in mid-term (five- and 10-year), and 35% ±5% in long-term (20-, 30-, and 50-year).