South Korea is set to join the World Government Bond Index (WGBI) in November 2025, FTSE Russell announced. The inclusion, coming after three previous attempts, marks a significant milestone for the nation’s financial market.
The country will have a 2.22% weight in the index, ranking ninth among 26 countries. This move is expected to draw over 75 trillion won ($56 billion) into South Korean government bonds, potentially reducing interest rates by 0.2% to 0.6%.
Kim Mi-ru, an economist, noted the positive impact on South Korea’s rising national debt ratio and potential ripple effects on corporate bond and loan rates. However, Joo Won, a financial analyst, cautioned about increased vulnerability to global market fluctuations.
South Korea’s inclusion follows efforts to improve market accessibility, including allowing third-party foreign exchange transactions and extending trading hours. FTSE Russell acknowledged these reforms as meeting the required standards.
The government plans to issue 201.3 trillion won in bonds next year, with 83.7 trillion won as net issuance. This WGBI inclusion could prove crucial in managing national debt and funding costs.
