Mirae Asset to sell Korean treasuries to retail investors

The South Korean government on Monday tapped Mirae Asset Securities Co. as the brokerage chosen to sell treasury bonds, the sale of which will be launched for the first time in June, and only for individual investors.

Mirae Asset is authorized to sell 1 trillion won ($750.5 million) worth of Korean treasuries to retail investors every year until the end of 2027 under the agreement with the Ministry of Economy and Finance.

The treasuries, issued with 10-year and 20-year maturities, will guarantee principal investments. Individual investors can buy up to 100 million won worth of the savings product and a minimum of 100,000 won.

Investors can redeem the savings bonds at any time after one year from the purchase date. But there will be a monthly redemption limit.

Investors will receive compounded interest based on the coupon rate plus the markup if they hold the bonds until maturity. The finance ministry estimates that a 10-year treasury bond with a 3.5% coupon rate will provide a 35% yield after taxation, while a 20-year bond with the same coupon rate will offer an 84% yield.

The average annualized yield for 10-year and 20-year treasuries will be 3.5% and 4.2% after taxation, respectively. The annualized yield and the yield to maturity could be higher depending on the markup level.

There will be a 14% tax for interest income with purchases up to 200 million won, compared with 15.4% to 49.5% of taxation under the existing tax system.

The investors can only sell their treasuries back to the government before maturity, but not to other retail investors.  

“The government bonds for retail investors guarantee a high level of interest and stability. We expect to attract attention from all investors regardless of age or income,” said a Mirae Asset official.

“The bonds will fulfill the needs of investors seeking stable returns and building wealth through installment buying, thus contributing to the healthy growth of their assets,” the official added.

Write to Jin-Gyu Maeng at maeng@hankyung.com

Jihyun Kim edited this article.