Press Release

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MINISTRY OF STRATEGY AND FINANCE

Embargo: 17:00, July 29, 2010 Release Date: 16:00, July 29, 2010

Contact Information: KyungYong Lee : 02-2150-5132 (Government Bond Policy Division)

2010 AUGUST T

REASURY

B

OND

I

SSUANCE

, B

UYBACK

S

CHEDULE

& JULY A

UCTION

R

ESULT

The Ministry of Strategy and Finance will issue Korea Treasury Bonds at the level of 4,500 billion Won every month from August 2010.

- As the demand for Korea treasury bonds increased during January to July, the issue amount of KTBs exceeds that of the initial plan, reducing the burden of KTB issuance for the next few months.

* During January to July, the issue amount of KTBs is KRW 54.6 trillion, an increase of KRW 11.6 trillion compared to that of the initial plan, KRW 43.0 trillion:

(Jan~Apr) monthly KRW6.5trn (May~July) monthly KRW5.5trn (Aug~) monthly KRW 4.5trn

- As there has been no considerable demand for conversion offer for KTBs, MOSF will not conduct a conversion offer in August, which were carried out at the level of KRW 500 billion every month from March to July. Accordingly, KTBs for conversion offer will be used effectively for market stability through the following operations: 1) buyback, 2) conversion offer in case of high market demand derived from new KTB issuance, and 3) reissuance of off-the-run KTBs in case of market unrest such as squeeze.*

* Squeeze may occur when investors purchase shares on a large scale for the purpose of influencing the market.

1) KTBs of 4,500 billion Won will be issued through competitivebidding.

3-year KTB worth 900 billion Won scheduled to be issued on August 3(Tue)will be fungible with "KTB0375-1306."

5-year KTB worth 1,700 billion Won scheduled to be issued on August 10(Tue)will be fungible with "KTB0450-1503."

10-year KTB worth 1,200 billion Won scheduled to be issued on August 17(Tue)will be fungible with "KTB0500-2006."

Press Release

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20-year KTB worth 700 billion Won scheduled to be issued on August24 (Tue)will be fungible with "KTB0550-2912."

- 2010 August Auction Schedule -

(Unit: billion Won)

Classifi- cation

Auction

Date

Settlement

Date

Issue

Date

Amount of Issue 3-

year KTB

5- year KTB

10- year KTB

20- year KTB Nominal 8-2-2010 8-3-2010 6-10-2010 900

Nominal 8-9-2010 8-10-2010 3-10-2010 1,700

Nominal 8-16-2010 8-17-2010 6-10-2010 1,200

Nominal 8-23-2010 8-24-2010 12-10-2009 700

2)Non-competitive purchasing option F/

For individual investors participating in competitive bidding,900 billion Won KTBs, not more than 20% of the offering amount in the auction, will be allocated first at the accepted bid rate

3) Non-competitive purchasing option II

A non-competitive purchasing option II is granted to primary dealers (PD) whereby PDs can purchase 10% of the accepted bid amount(up to 25% for top five PDs and 15% for the next top five PDs)and then 3 additional business days is given to PDs for purchase the day after the auction is closed.

- A PD’s exercise rate for non-competitive purchasing option II is the highest accepted bid rate determined by the multi-price auction method.

4) Inflation-linked Korea Treasury Bond (KTBi) Issuance

PDs are granted the right to purchase KTBi up to 20% of the accepted amount of 10-year KTB within 4 business days including the auction day.

- The issue rate of KTBi is calculated by subtracting spread announced by the Korea Exchange right after 10-year KTB auction from the highest accepted rate of 10-year KTB.

* Financial Support: A fund of approximately 1.0 trillion Won will be offered in August – The

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MINISTRY OF STRATEGY AND FINANCE

5) Buyback and conversion offer plan

MOSF will buy back KTBs of KRW 2.0 trillion through two buyback operations in August 2010. For details, refer to Appendix 1.

* Appendix 1: 2010 August KTB Buyback Schedule

Appendix 2: 2010 July Korea Treasury Bond Auction Result

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Appendix 1 ’2010 August KTB Buyback Schedule

1. 2010 August KTB Buyback Schedule

The Ministry of Strategy and Finance plans to buy back Korea Treasury Bonds worth approximately 2.0 trillion Won through two buyback operations in August 2010.

(Types and Amount) Types and amount of KTBs for buybacks are as follows.

Buyback Date Types of KTB Amount

Aug. 11, 2010 (Wed) 10:4011:00

KTB 0500-1103 (maturity Mar 2011, 5 year) KTB 0765-1104 (maturity Apr 2011, 10 year) KTB 0550-1106 (maturity June 2011, 3 year) KTB 0691-1107 (maturity July 2011, 10year) KTB 0475-1109 (maturity Sept 2011, 5 year) KTB 0662-1110 (maturity Oct 2011, 10 year) KTB 0475-1112 (maturity Dec 2011 , 3 year)

1.0 trillion Won

Aug. 25, 2010 (Wed) 10:4011:00

KTB 0500-1103 (maturity Mar 2011, 5 year) KTB 0765-1104 (maturity Apr 2011, 10 year) KTB 0550-1106 (maturity June 2011, 3 year) KTB 0691-1107 (maturity July 2011, 10year) KTB 0475-1109 (maturity Sept 2011, 5 year) KTB 0662-1110 (maturity Oct 2011, 10 year) KTB 0475-1112 (maturity Dec 2011 , 3 year)

1.0 trillion Won*

Details will be announced on the website of the Bank of Korea on Aug. 6, and Aug. 20, respectively.

(Anticipatory effect)

The efficiency of the government bond market is expected to improve by purchasing off-the-run KTBs whose trading is not active in the secondary market. In addition, the buyback operation will mitigate roll-over risk by spreading maturity dates, and

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MINISTRY OF STRATEGY AND FINANCE

Appendix 2 ’2010 July Korea Treasury Bond Auction Result

Korea Treasury Bonds worth 6,980 billion Won were issued in July 2010.

< 2010 July Nominal KTB Auction Result >

(unit: billion Won)

Classification

Competitive bidding

Non-competitive purchasing

option

Conversion offer (C)

Total (A+B+C) Auction

date

Issue (planned)

Issue Amt.

(weighted avg.

accepted rate,%)

(A)

Period

Issue amount

(B)

3 year KTB (KTB 0375-

1306)

’10.7.5 1,100 1,200

(3.85) ’10. 7.5~7.8 13 - 1,213

1503)

’10.7.12 1,600 1,821

(4.54) ’10..7.12~7.15 265 456* 2,542

2006)

’10.7.19 1,500 1,700

(4.91) 10..7.19~7.22 240 1,940

2912)

’10.7.26 800 900**

(5.10) ’10..7.26~7.29 125 1,0

26

Total 5,000 5,622** 643 456 6,721

*The conversion offer for KTBs worth 456 billion Won was conducted on July 22, 2010

** 600 million Won is included for allocating first to individual investors (non-competitive purchasing option )

< 2010 July KTBi Auction Result >

(unit: billion Won) Issue period Estimated

amount

Issue rate(%) Issue amount

10 year KTBi (KTBi0275-2006)

’10. July 19 ~ July 22

340 2.36 259