30-Year Government Bond Yield Hits 4.685%, Testing Insurers' Buying Power

The yield on the 30-year government bond reached 4.685% on the 13th, setting a new all-time high. Over the past four months, the yield has risen by 110 basis points, putting insurers' buying power to the test. According to bond market data, the 30-year government bond is historically priced low, but there is no clear buying entity identified. Long-term bonds exhibit significant price volatility due to changes in interest rates; when rates rise, bond prices fall, increasing the burden of unrealized losses for institutions. Insurers are considered major buyers of long-term bonds due to their long-term liability structure, but if interest rates rise beyond a certain level, the incentive to buy diminishes, potentially impacting capital solvency indicators. The K-ICS ratio is crucial; as interest rates rise, the duration of insurance liabilities may shorten faster than that of assets, reducing the necessity to purchase long-term bonds. Some insurers view the current interest rate level as a buying opportunity, with actual purchases of 43.6 billion won in 30-year government bonds on the 13th and 97.2 billion won on the 12th. However, this scale alone does not guarantee a recovery in the supply and demand for long-term bonds, and capital regulations and unrealized losses may constrain further buying decisions.

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