South Korea just borrowed money from international markets at the cheapest rate in its history. On October 23, the Ministry of Economy and Finance issued approximately $1.7 billion in foreign exchange stabilization bonds, locking in a spread of just 17 basis points over US Treasuries on its dollar-denominated tranche.
For context, that spread was 25 basis points in 2024. In the world of sovereign debt, shaving 8 basis points off your borrowing costs is the equivalent of a credit score upgrade that actually matters.
Breaking down the bond sale
The issuance came in two flavors. The first was a $1 billion tranche of 5-year dollar-denominated bonds, priced at a yield of 3.741%. That 17-basis-point spread over US Treasuries represents a new record low for South Korean sovereign debt.
The second portion consisted of roughly $700 million equivalent in yen-denominated bonds. These carried maturities ranging from 2 to 10 years and were priced at yields in the 1% range.
