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The retail investor-exclusive 10-year and 20-year Korea Treasury Bonds (KTBs) have failed to meet the minimum subscription for the fourth consecutive month, strained by an overall downtrend in bond yields amid expectations of monetary easing by the central banks of the United States and Korea, according to market watchers Wednesday.

Some call for the addition of five-year bond products to the portfolio, coupled with an outright exemption of a financial income tax of 15.4 percent — an already-significant tax break from the previous rate of up to 50 percent.

However, the finance ministry — the issuer of the bonds — opposes the suggestion, since the shorter-duration products will fuel speculation, undermining the policy priority to bolster the post-retirement income source for bond holders.

Also out of the question is the tax exemption, the ministry says, for fear of enormous backlash from the vast majority of the public resentful of investors amassing wealth with the help of government tax relief.

According to Mirae Asset Securities, the competition ratios for 10-year and 20-year products came to 0.29 to 1 and 0.33 to 1, respectively.

The ratio for the 20-year bond stood at 0.76 in June, dropping to 0.59 in July and 0.27 in August.

The figure for the 10-year bonds peaked at 3.49 to 1 in June before declining to 1.94 in July and 1.17 in August.

The poor performance is notable since the June figures exceeded 126 billion won ($94 million), propelled by the promise of up to 108 percent held-to-maturity increases in return.

The disappointing September figures followed the ministry having applied add-ons of 0.22 percent for 10-year products and 0.42 percent for 20-year products.

The previous add-ons were 0.15 for 10-year products and 0.3 percent for 20-year products.

Market watchers say the long-term investment vehicle will no longer be able to draw many investors, weakened by imminent rate cuts by the U.S. Federal Reserve and the Bank of Korea.

“Many bond investors will be inclined to seek short duration gains, rather than having up to 200 million won locked in for decades,” an industry watcher said.

The government introduced the two duration bonds to grant retail investors equal access to the vibrant market sector, long been limited to large institutional investors.

Changes in Treasury ownership midway through is restricted, making short-term scalping impossible. Scalping is an investment technique where an investor makes a small profit by holding a buy or a sell position for only a brief period.

Also, early redemption will remove the benefit of the flat rate, along with the high rates of returns. Funds redeemed will not be immediately available.