But the yield curve flattened slightly as investors, disappointed at news of a delay in the inclusion of South Korean bonds in the World Government Bond Index, shunned long-end bonds. Citigroup decided this week to delay its final approval on including South Korean bonds in the World Government Bond Index (WGBI). Analysts said the delay reflected the government's lack of will to join the global index, which could bring more foreign investors and thus add more pressure on a strong won.
"The delay is of course disappointing, but it hasn't sparked a sell-off as hope is still in place," said Yoon Yeo-sam, a fixed-income analyst at Daewoo Securities. The one- and three-year treasury bond yields fell 2 basis points each, while longer-end yields dropped 1 basis point. The March treasury bond futures contract jumped as much as 19 ticks before backtracking to end up 10 ticks at 109.65. Foreign investors bought net 726 billion won ($630.7 million) worth of debt futures.