South Korea FSS Warns 30-Year Government Bonds Can Incur 17% Loss if Rates Rise 1%

According to the Financial Supervisory Service (FSS), Korea's financial regulator issued an investor advisory on July 6 warning that government bonds and other low-risk debt instruments can generate substantial losses if sold before maturity. The FSS highlighted that 30-year government bonds could face approximately 17% evaluation losses if market interest rates rise by 100 basis points (1 percentage point).

The agency noted that while government bonds are typically classified as low-risk investment products due to minimal credit risk, their prices decline when market interest rates rise. Long-term bonds are particularly sensitive to rate changes. The FSS advised investors with limited income or potential emergency funding needs to consider the possibility of early redemption losses.