Average Korean government bond yields 45rose by 10Interest costs when issuing a trillion won 450increase by hundreds of millions of won

The Asian Development Bank (ADB) said that between 2month 2day and 5month 29day, Korean won-denominated bond yields rose by an average of 45bp across all maturity ranges.

The report was included in the '15Asia Bond Monitor for 2026year 6month' published by the ADB on the last day of last month.

The report analyzed the impact as a combination of inflationary pressures from the war in the Middle East, a weaker won and the Bank of Korea’s signal of a tightening monetary policy.

If government bond yields rise by an average of 45 basis points and the government issues new government bonds worth 10 trillion won under the same conditions, the annual interest burden would increase by about 450 billion won, the ADB calculated.

Government bond yields serve as a benchmark for corporate bond and bank lending rates.

Therefore, a rise in government bond yields could increase the interest costs borne by companies and households when they borrow.

In particular, it raised concerns that the burden could grow, especially for borrowers vulnerable to interest payments, such as the self-employed.

According to data the Bank of Korea submitted to People Power Party lawmaker Park Sung-hoon, if lending rates rise by 0.25 percentage points, the annual interest burden on all household loan borrowers increases by about 3 trillion won and 2,000 billion won.

Per borrower, that works out to an additional annual burden of about 1 won.163,000."

For self-employed people, when loan interest rates rise by 0.25percentage points, 1annual interest burden per person increases by about 55ten thousand won.

If interest rates rise by 0.50percentage points, the burden on self-employed people expands to about 110ten thousand won.