GPIF Purchased 1.9 Trillion Won in Korean Bonds Ahead of WGBI Inclusion

Japan's Government Pension Investment Fund (GPIF) purchased 1.9 trillion won in South Korean government bonds as of the end of March this year, according to portfolio data released on July 8. The purchases occurred days before South Korea's inclusion in the World Government Bond Index (WGBI) began in April. Bond market participants had previously expressed concerns that Japanese investors including GPIF might delay their entry due to strict fund execution processes and system preparation issues, making GPIF's actual capital inflow a key indicator of WGBI inclusion success.

GPIF Purchased 63 Bond Types Matching WGBI Benchmark

GPIF purchased a total of 63 bond types, matching the exact number of South Korean government bonds included in the WGBI. The fund distributed purchases evenly across all 63 bonds rather than concentrating on specific issues, with each bond receiving purchases in the tens of billions of won range. This portfolio composition indicates GPIF structured its holdings to align with the benchmark index.

Largest Purchases Included 30-Year and 3-Year Bonds

The largest single purchase was the 30-year non-benchmark bond 23-2, maturing in March 2053, with GPIF acquiring approximately 7.77 billion yen (approximately 72.7 billion won). The fund also purchased 7.16 billion yen (approximately 67 billion won) of the 3-year non-benchmark bond 25-4, and approximately 57.1 billion won of the 30-year non-benchmark bond 25-2.

Japanese and Global Institutional Investors Entered Market in April

Following GPIF's purchases, other Japanese institutional investors along with US and European pension funds entered the Korean bond market in April. Bond market participants stated that Japanese institutions were active buyers and that US and European pension funds continued to express investment interest. Yonhap Infomax reported on March 31 at 8:34 AM that Japanese public pensions including GPIF had begun purchasing Korean government bonds ahead of actual WGBI inclusion, and on April 30 at 2:56 PM that US and European pension funds had joined the buying activity.

FAQ

How much did GPIF invest in Korean government bonds?

GPIF held 1.9 trillion won in South Korean government bonds as of the end of March this year, according to portfolio data released on July 8.

When did South Korea's WGBI inclusion begin?

South Korea's inclusion in the World Government Bond Index (WGBI) began in April, with GPIF making its purchases at the end of March just days before the inclusion started.