Foreign investors turn net sellers of Korean bonds in Aug.

Foreign investors turned net sellers of Korean bonds in August for the first time in about 3.5 years, according to industry data released on Sunday. The data, provided by investment banks and debt market sources, shows that foreign investors sold a net 839.7 billion won ($624.8 million) worth of Korean bonds last month, marking their first monthly net selling since January 2023.

Despite still being net buyers of 63.26 trillion won in the year through September 11, their holdings fell sharply, dropping by about 12.9 trillion won from a record 356.6 trillion won on July 24 to 343.6 trillion won on September 2, marking the largest decline over a comparable 27-trading-day period in the past five years. The slowdown largely reflects the erosion of arbitrage opportunities, as Korean bonds have lost their yield advantage over U.S. assets after currency hedging.

The arbitrage spread fell from 68.3 basis points at the end of last year to minus 30 basis points as of September 10.

Brief written by urgent.news from The Korea Times's own syndicated text. Machine-written — may contain errors; check the original before relying on it.