The coupon rates of treasury bonds are falling below the key interest rate, stoking speculation that the Bank of Korea s (BOK) rate hike cycle ended with its latest decision, Jan. 13. In particular, the longer the maturity of treasury bonds, the steeper their coupon rates fall, as owning treasury bonds for a longer period of time is likely to result in less profit.
In less than a week since Heungkuk Life Insurance decided to delay the exercise of a $500 million call option on its dollar-denominated perpetual bonds, sending a shockwave to Korean companies dollar bonds market, the life insurer reversed its position in a move to calm and rectify souring investment sentiment in Korean companies bonds markets.