Market Summary

Yield Movements

Yields on local currency (LCY) government debt securities in the Republic of Korea rose across all tenors between 1 June and 31 August on expectations of further monetary tightening by the Bank of Korea. The Bank of Korea raised the base rate by a cumulative 50 bps to 3.00% in its 16 July and 28 August monetary policy meetings, noting that inflation is expected to remain above target on persistent pressures.

Local Currency Bond Market Size and Issuance

The Republic of Korea's total LCY debt securities reached KRW3.6 trillion at the end of June. Excluding debt securities with maturities of less than 1 year, LCY bonds outstanding amounted to KRW3.3 trillion after a 1.2% quarter-on-quarter expansion. Growth was driven by sustained government issuance and higher corporate issuance, with total bond issuance rising 16.0% quarter-on-quarter.

Sustainable Bond Market

The Republic of Korea's outstanding sustainable bond market contracted 2.0% quarter-on-quater in Q2 2026 to USD180.4 billion as maturities exceeded new issuance. Social bonds continued to dominate the sustainable bond market with a share of 54.2%, followed by green bonds at 29.5%. The corporate sector comprised a larger share of green, sustainability, and sustainability-linked bonds; while social bonds were dominated by issuances from government-owned and government-related entities.