Government bond yields are displayed on an electronic board in the lobby of the Yonhap News Agency building in central Seoul, in this Sept. 30, 2022 file photo. Yonhap

Korea has failed to be added to the World Government Bond Index (WGBI) run by FTSE Russell, the London-based organization said Thursday.

Korea will remain on its watch list for a potential upgrade to a market accessibility level of 2 from 1 and consideration for inclusion in the WGBI, according to the FTSE Russell.

The country was added to the WGBI watch list in September 2022 and must wait until September this year to see if it will be included in the index when the financial entity announces its decision.

"Local market authorities continue to progress on initiatives intended to improve the accessibility of Korean government bonds for international investors, which would facilitate the fulfillment of the criteria for a Market Accessibility Level of 2," the British entity said in a release.

The WGBI is a broad index designed to measure the performance of government bond markets, including local currencies and sovereign bonds of major advanced nations.

Korea has been pushing for its inclusion in the global bond index, which it hopes will help attract foreign investment and raise investor confidence in its government bonds.

Korea and India are the only countries among the world's top 10 economies in terms of nominal gross domestic product that have yet to be included in the bond index.

"The government will push for reform measures regarding foreign investment with a goal to be included in the FTSE WGBI within this year," Seoul's finance ministry said. "We will also expand communications with international investors."

FTSE Russell said it acknowledged "the meaningful progress" over the last six months by the Korean government, as well as Seoul's commitment to address feedback from investors regarding the implementation of reform measures.

As recent positive developments, the entity pointed to the Korean Securities Depository's announcement to sign contracts with Clearstream and Euroclear to establish a link between KSD and the international central securities depository platforms, with the service to be available by June 2024.

It also noted a set of foreign exchange market reform measures by the Korean authorities, such as the extension of its currency trading hours and the opening of the currency market to foreign financial institutions.

Last year, Korea abolished the investor registration certificate scheme for foreign investors and implemented the Legal Entity Identifier registration policy.

"Ahead of the next scheduled review in September 2024, FTSE Russell will continue to monitor the positive developments in the Korean government bond market towards the successful fulfillment of the criteria for Market Accessibility Level 2," it added.

FTSE Russell is a subsidiary of the London Stock Exchange Group that produces, licenses and markets stock market indices. (Yonhap)