Exclusive: South Korea suspends efforts to get domestic bonds into WGBI - source

By Seunggyu Lim

SEOUL (Reuters) - South Korea has suspended efforts to have its domestic debt added to the World Government Bond Index (WGBI), one of the world's three major bond indexes, a person with direct knowledge of the matter told Reuters.

"We are likely to keep our efforts on seeking inclusion into WGBI on the sidelines for now ... We're putting that off, temporarily," said the person, who requested anonymity as he was not authorised to discuss the matter publicly.

The decision might mean that South Korea could miss out on huge investment inflows as there are trillions of dollars of global cash following the WGBI.

Another source familiar with the matter explained that foreign capital inflow in onshore markets is ample enough for the country's bond market for now.

"From the treasury department's perspective, they would be questioning if there is a need to put more oil into an already hot (market) as foreign investors are pouring in," the second source said.

The nation's finance ministry had said last October that it was seeking to have South Korea's onshore bonds added to the flagship index managed by FTSE Russell.

Foreign net investment in local bonds marked the biggest monthly inflow on record in February with 8.99 trillion won ($7.94 billion), following net buying of 1.158 trillion won in January.

($1 = 1,132.1000 won)

(Reporting by Seunggyu Lim; Writing by Cynthia Kim; Editing by Christopher Cushing and Sherry Jacob-Phillips)