SEOUL– Banks will resume bond sales “gradually” in a way that doesn’t burden the market amid lingering worries over a credit crunch, Seoul’s financial regulator said Monday.
The government has unveiled a series of large-scale liquidity-injecting steps since the Legoland-linked debt debacle, which has led to a spike in market interest rates.
It has also urged commercial banks and state-run enterprises to reduce or evenly distribute bond selling in a bid to lower the fast-rising borrowing costs.
“The banking community will gradually resume selling bonds to levels that won’t burden the market, while maintaining communication with financial regulators,” the Financial Services Commission (FSC) said in a press release.
The decision was made during a meeting with officials from the Financial Supervisory Service and the Bank of Korea, the country’s central bank.
The FSC said debt sales will resume as expectations have been growing for slower monetary tightening at home and abroad, as well as the bond market steadily gaining stability thanks to the government-led liquidity-pumping measures.
Banks’ debt sales will resume first for the purpose of rolling over bonds maturing later this year, and schedules for next year will be coordinated in consideration of market situations.
The regulator also said it will keep close tabs on the bond market until early next year and continue to communicate with banks to help them carry out their bond sales “flexibly.”
Source: Yonhap News Agency