Seoul to force dealers to promote inflation-linked bonds

The government will require specialized dealers of state bonds to offer prices of inflation-indexed bonds as part of efforts to jump-start their trading, the finance ministry said Thursday. Beginning next month, primary dealers, or market makers of government bonds, will be required to offer sales and purchase prices of inflation-indexed bonds, according to the Ministry of Strategy and Finance. "The volume of bonds issued in the first half of 2011 was low as primary dealers are shunning taking over inflation-linked bonds due to a slump in the logistics market," the ministry said. The mandatory offering of sales and purchase prices will be introduced in three stages, after which dealers will be required to make at least 10 offers each for the sale and purchase of indexed bonds. Also to encourage primary dealers to voluntarily promote inflation-linked bonds, the government will count the amount of bonds traded by primary dealers as three times more than their actual volumes in their evaluation, the ministry said.