South Korea announced a major increase to its ceiling for foreign-currency bond issuance, raising the cap to $5 billion under the 2026 budget plan. The move more than triples the previously planned cap of $1.4 billion, aimed at protecting its currency and attracting investors. The government will sell bonds overseas and then utilize the resulting foreign exchange earnings following a $350 billion U.S. investment deal. The revision comes after a steep spike in dollar demand induced by a recent trade deal with the United States, the authorities say — conditions that are likely to weigh more heavily on Korea’s foreign exchange market. Korea’s won has also been under sustained depreciation pressure in recent months, owing to robust demand for the U.S. dollar, high oil prices, and concerns that global trade may slow. In recent months, the government has already ramped up foreign-currency sovereign-bond issuances. In October, it raised US dollar and Japanese yen FX bonds totaling $1.7 billion — at record-low spreads over U.S. Treasuries, signaling robust investor confidence. South Korea sells more bonds to attract investments South Korea is selling Korea Treasury Bonds (KTBs) with maturities ranging from 2 to 50 years, providing investors with more options to choose from. The government wants to spread its debt payments over time, so it doesn’t have to borrow a large amount at once. These different maturities enable both long-term investors, such as pension funds, and shorter-term investors, including banks and companies, to participate. Credit rating agencies, such as Fitch, gave the country a high score of “AA-” for its long-term debt. S&P also rated the country “AA” for long-term and “A-1+” for short-term debt, and South Korea expects these ratings to attract approximately $15 billion to $20 billion in foreign investment. This money will be used for government projects and to demonstrate to investors that the country is a safe place for them to invest their money. Raising the foreign bond limit to $5 billion also helps South Korea fund its 20-year investment plan with the United States, which is worth $200 billion. The Ministry of Economy and Finance is also collaborating with institutions such as the National Pension Service and major exporters, including Samsung and SK Hynix, to balance foreign currency supply and demand and maintain a stable won. South Korea gives investors higher returns and protects their money Investors will get better returns from these bonds because the five-year dollar bonds that South Korea issued in October 2025 paid a slightly higher rate than similar U.S. Treasury bonds. Experts even say the bonds can earn about 5-6% per year compared to the 4.6% from 20-year U.S. Treasuries. The bonds are also safer and more reliable because the country has low inflation and moderate government spending. Investors will utilize them to diversify their portfolios, reduce risk, and generate a steady income. The country has even implemented strict rules to ensure the bonds are safer for investors. The government limited foreign exchange bonds to $5 billion to protect the won from big changes and encourage banks to offer investors hedging options. The U.S. and South Korea also agreed not to use currency unfairly, so that more investors can put their money in the Asian country. Financial firms must educate retail investors on how hedging tools work and how they can mitigate risk, enabling more people to protect their investments. The country has made these bonds a reliable choice for people around the world who want to grow their wealth safely and protect it from the market’s ups and downs. Get up to $30,050 in trading rewards when you join Bybit today
