Mirae Asset Securities Opens Subscription for 230 Billion Won in Government Bonds for Individual Investors; Retirement Pension Investment Allowed for the First Time

[Financial News] Mirae Asset Securities announced on the 9th that it will accept subscriptions for September’s government bonds for individual investors for five business days through the 15th. Starting this month, the bonds can be purchased not only through existing dedicated accounts but also through Defined Contribution (DC) and Individual Retirement Pension (IRP) accounts.
Applications can be submitted from 9 a.m. to 4 p.m. at Mirae Asset Securities’ branches nationwide or through its Mobile Trading System (MTS). Customers with DC and IRP accounts can apply through the retirement pension products section in the MTS.
The total issuance for September is 230 billion won. By issue, the offerings consist of 2 billion won in three-year coupon-bearing bonds, 3 billion won in three-year compound-interest bonds, 50 billion won in five-year bonds, 110 billion won in 10-year bonds, and 65 billion won in 20-year bonds.
The key feature of this issuance is that 10-year and 20-year government bonds for individual investors can now be included in retirement pension accounts. This enables the company to respond to demand from retirement pension customers seeking to add long-term investment products. Government bonds can also be purchased through retirement pension accounts only by applying during the September subscription period.
The total issuance has also been increased by 80 billion won from the previous month. Issuance of 10-year and 20-year bonds was significantly expanded to reflect demand for long-term investments.
The additional interest rates are 0% for three-year bonds, 0.1% for five-year bonds, 0.35% for 10-year bonds, and 0.35% for 20-year bonds. Accordingly, the pretax returns for investors who hold the bonds to maturity are 11.3% for three-year coupon-bearing bonds, with an annual average of 3.8%; 11.8% for three-year compound-interest bonds, with an annual average of 3.9%; 22.8% for five-year bonds, with an annual average of 4.6%; 59.3% for 10-year bonds, with an annual average of 5.9%; and 161.8% for 20-year bonds, with an annual average of 8.1%.
Investor interest in government bonds for individual investors has remained steady. Through August this year, cumulative subscriptions for the bonds through Mirae Asset Securities, the sole sales agent, totaled approximately 2.29 trillion won. Given that the total offering size was 1.4 trillion won, the average subscription ratio reached 1.62 to 1. The figures suggest that demand for stable, long-term investment opportunities continues amid market volatility.
Government bonds for individual investors are savings-type government bonds issued for individual investors. In addition to the stability of principal protection, investors can receive an additional interest rate when holding the bonds to maturity and benefit from annual compound-interest payments in the case of compound-interest bonds. Dedicated accounts also offer separate taxation for purchases of five-year bonds or longer, up to a total purchase limit of 200 million won. In retirement pension accounts, taxation is deferred during the investment period, and low-rate pension income tax is applied when the funds are later received as a pension, subject to the relevant requirements. This makes a two-track investment strategy possible, using dedicated accounts and retirement pension accounts according to the investment period and the nature of the funds.
An official from Mirae Asset Securities said, "With the introduction of this system, government bonds for individual investors are expected to establish themselves as a new long-term investment alternative that can utilize 30% of the stable assets in retirement pension accounts," adding, "As customers show relatively strong interest in five-year bonds through dedicated accounts because of their comparatively shorter investment period, retirement pension accounts and dedicated accounts are expected to meet investment demand according to their respective characteristics."
[email protected] Choi Doo-sun Reporter