(Maeil Business Newspaper) [Reporter’s 24 Hours] If Korea Is to Live Up to Its Name as a Developed Government Bond Market (October 29, 2026)

321.3 trillion won. That is the amount by which the government’s national debt will grow over the next four years. The national debt, which stands at 1,412.8 trillion won this year, is projected to swell to 1,734.1 trillion won by 2030.

Despite a record semiconductor boom, the burden on the national budget is growing because of population aging and rising fiscal expenditures. Since the burden of issuing government bonds will inevitably increase as well, securing investors who will buy them steadily is becoming ever more important. Against this backdrop, the upgrade to developed-market status in the Bloomberg bond indices that the government is pursuing is welcome news.

If Korean government bonds are classified as developed-market bonds in the Bloomberg indices, their international standing could rise once again, following their inclusion in the World Government Bond Index (WGBI) in April. Expectations are high that Bloomberg’s classification of Korea as a developed market could be realized as early as next year. The investment threshold could also be lowered for global pension funds and sovereign wealth funds that have so far excluded emerging-market bonds from their investment universe.

Whether the upgrade to developed-market status will translate into actual purchases, however, remains to be seen. The WGBI inclusion, under way since April, will be completed in November, but foreign investors’ net purchases of government bonds are assessed to have fallen short of expectations. This is because the actual scale of investment depends on conditions such as interest rates and exchange rates.

Even if additional funds flow in thanks to the developed-market label, the key question is how long they will stay. Trust can be secured only by demonstrating consistent fiscal management and a stable investment environment. Major overseas investors must be assured that they can invest without worry even if the government increases bond issuance.

The other side of expanding foreign investment must also be examined. The share of government bonds held by foreigners has already exceeded 25%. In the short term this can help lower interest rates, but it also raises the government bond market’s sensitivity to external factors. When global financial markets are shaken, there is a risk that large-scale selling will simultaneously fuel rising interest rates and a falling won. This is why the domestic base of long-term investors must be strengthened alongside attracting overseas investors.

Developed-market status is harder to keep than to gain. The remaining task is to build trust that Korean government bonds are an asset worth holding with confidence even in a crisis.

[Kim Geum-i, Reporter, Economy Department]

https://n.news.naver.com/article/009/0005756051?sid=110&type=journalists&cds=news_edit